There is a pressing need for multilateral development banks (MDBs) to lead and innovate on adaptation finance. Adaptation needs are rising, and financing is struggling to keep up. Multilateral development banks have the imperative to make sure their own adaptation commitments are as effective as possible, and to contribute to mobilising the transformational levels of private capital required.
E3G and the UK Foreign, Commonwealth and Development Office (FCDO) delivered a series of closed-door virtual workshops on innovative solutions for multilateral development bank adaptation finance ahead of COP27. The workshops brought together experts from across the multilateral development bank system, to discuss promising solutions to unlocking significant further adaptation finance. This included identifying new or scalable innovative financial instruments and understanding how to better leverage private sector finance for adaptation. Furthermore, the workshop series included technical workshops on cooling, agriculture, and innovative financial mechanisms. It concluded with a panel discussion co-hosted with the European Investment Bank and UK FCDO at COP27.
Following the conclusion of this workshop series, E3G has produced a briefing summarising the discussions and potential next steps. Drawing on these engagements, we also present a pilot proposal for a Joint MDB–DFI Facility on Sustainable and Efficient Cooling, to catalyse adaptation finance in this area.
Innovative multilateral development bank finance for adaptation
E3G, in cooperation with the UK FCDO, convened a workshop series with multilateral development bank (MDB) adaptation experts in the run-up to COP27, 2022. The series explored ways to mainstream adaptation across critical sectors of multilateral development bank lending. There was a focus on cooling and agriculture, and on the relevant innovative financial mechanisms. This paper summarises those discussions.
Innovative multilateral development bank adaptation financing for cooling
Cooling is a critical sector for climate adaptation. However, multilateral development banks (MDBs) and development finance institutions (DFIs) face barriers to scaling up dedicated financing. This briefing proposes a Joint MDB–DFI Facility on Sustainable and Efficient Cooling as a first step to resolve these issues. Such a facility has the potential to tackle the relevant barriers and challenges and increase cooperation and activity on cooling.
For more insight into what MDBs (and other Public Banks) are doing to align their work on adaptation and other areas with the Paris Agreement, please see E3G’s Public Bank Climate Tracker Matrix.
