Alignment will help 26 borrowing member countries meet their own commitments to combat climate change

The Inter-American Development Bank (IDB) on Monday (November 1) announced that its loans and projects will be fully aligned with the Paris climate agreement by 2023.

This move will help countries throughout Latin America and the Caribbean fight climate change while also advancing steps to help those people most vulnerable with a sustainable recovery for everyone.

The announcement comes as world leaders gathered at COP 26, the annual United Nations climate change conference, to work on ways to decelerate global warming and fulfill climate goals agreed to at a previous summit in Paris.

Alignment requires the IDB Group’s work to be consistent with a country’s net-zero emissions and climate-resilient development goals. It must also be compatible with the Paris accord’s overall long-term decarbonisation objective.

“We are also pushing past the Paris Agreement objectives to help address this truly global challenge. We know that if we prioritise smart investments today, the cornerstone of our global fight against climate change can mutually reinforce our pandemic recovery efforts and we can speed up our responses”, said IDB President Mauricio Claver-Carone.

“Aligning our work to Paris Agreement objectives furthers our commitment to limit the temperature rise to well below two degrees Celsius and build climate resilience. But this alone is not enough.”  

Also, the IDB announced another ambitious climate target to provide US$24 billion for climate and green finance over the next four years. Green finance extends beyond climate to include nature, biodiversity, pollution, and other environmental issues.

The green finance target builds on the IDB Group’s established track record of backing projects to restore and preserve natural capital, reduce pollution, improve waste management, and promote the circular economy.  

The IDB recognises the vital role of nature in climate mitigation, resilience and for economies and livelihoods. Because of that, between 2015 and 2020 the IDB invested in 28 projects with nature-based solutions components, with a total financing of US$815 million. These projects leveraged an additional US$437 million in financing from partners, amounting to nearly US$1.25 billion.

“We are pushing the envelope on our financing, improving our internal structure to prioritise climate action, and increasing our engagements and external partnerships,” said Claver-Carone.

“Our role, as the region’s leading development bank, is to help our 26 borrowing member countries mitigate and adapt to climate risks. We are ready to help seize an unprecedented opportunity to achieve a decarbonised and climate-resilient future in the region.”

CENTRAL PILLAR OF VISION 2025

Advancing climate change action is a central pillar of Vision 2025, the IDB’s blueprint for powering sustainable growth and recovery in the region. Assessing the IDB’s alignment will be key to avoiding activities that could hinder the transition to net-zero emissions. Aligning operations will also improve the management of climate-related financial exposure in the IDB Group’s portfolios. In addition to the alignment effort, the IDB is committed to assessing disaster and climate risk in 100 per cent of its moderate and high-risk operations by 2023.

Monday’s announcement also adds to the IDB’s ongoing work to help integrate climate considerations and funding into the agendas and policies of member borrowing countries. By the end of 2021, at least 75 per cent of the Bank’s regional member countries will have presented their updated Nationally Determined Contributions, in many cases with IDB support.