Washington D.C., 15^th March, 2023 IsDB President H.E. Dr. Al Jasser participated in the Multilateral Development Banks (MDB) Heads meeting to discuss the indicative 2025 climate finance expectations, ways to respond to calls for enhanced climate action, and MDBs cooperation in responding to the calls from G20 on MDB reform as well as Capital Adequacy Framework (CAF) Review recommendations implementation, including the transformation of the Global Emerging Markets Risk Database (GEMs).. The meeting, held in Washington D.C. during the World Bank Spring meetings, brought together leaders from MDBs and international finance institutions to review progress and set ambitious targets for climate finance in low and middle-income countries.

During the open session, the MDBs reported that they have exceeded their target set in 2019, which aimed to achieve at least US$65 billion annually by 2025, with US$50 billion for low- and middle-income economies and at least US$18 billion for adaptation. In 2021, MDBs committed a total of $52 billion in climate finance for low and middle-income countries, with $18 billion allocated for adaptation efforts.

However, MDBs acknowledged that more effort is needed to work on their individual climate finance targets by 2025, which, if achieved, will significantly benefit member countries' climate action efforts. The Sharm el-Sheikh Implementation Plan (COP27 cover decision) has highlighted that a global transformation to a low-carbon economy would require investments of at least USD 4-6 trillion per year. Achieving this funding goal would require a swift and comprehensive transformation of the financial system and its structures and processes, involving all financial actors, including MDBs.

Other global initiatives with potential implications for MDBs' climate finance ambition were also discussed, including the G20 MDBs Capital Adequacy Frameworks (CAF) review recommendations, the Bridgetown Initiative, and the Independent High-level Expert Group on Climate Finance (IHLEG)'s Songwe-Stern Report. MDBs  agreed to move away from reporting only on their level of climate finance and instead showcase the systemic impact of such finance and increase their country-level coordination efforts in a structured manner.

In response to the discussions,

H.E. IsDB president emphasized that the Bank has already achieved achieved 31% of its project financing in 2021, and further achieved 33% of climate finance in 2022 (65% if which for climate adaptation). H.E. Explained that the climate finance itself is not the issue here, the real issue is the commitment to achieving “just finance” to increase the impact of MDB climate finance. Towards putting to action the concept of “Just financing”, H.E. stressed the need for MDBs to coordinate and learn from each other as to how best to enhance the developmental impact of MDB climate spending.

Regarding setting a new collective target for MDBs, H.E. recognized the tremendous efforts made by MDBs to increase their ambition on climate finance. However, H.E. emphasized the need of more donor support to ensure appropriate financing levels for countries to further green their interventions through grant financing for project development, preparation, and capacity building..

IsDB also emphasizes the need for MDBs to collaborate on developing new business models to mobilize sufficient financing volumes to meet the increasing demand from countries for adaptation and resilience building. Finally, IsDB agreed that MDBs need to showcase the impact of their interventions in transforming countries' low-carbon, climate-resilient economies.