MOBILISING CAPITAL,MITIGATING RISK:THE ROLE OF IFIS IN
ADVANCING CLIMATEFINANCE IN ASIA-PACIFICMARCH-2024

The Report is a joint effort of the ADA members andpartners across Asia pacificPrincipal Author
Dr. Jyotsna Mohan
Asia Development AllianceContributions
Qurratul Ayen
Asia Development AllianceForeward

The Asia-Pacific region stands at a crossroads. As the engine ofglobal economic growth, it also faces the brunt of climate change,
with rising sea levels, extreme weather events, and environmental
degradation threatening its future. Multilateral Development Banks(MDBs) play a crucial role in steering the region towards asustainable future. However, achieving this requires a delicate
balancingact–
ensuring
adequateclimatefinancereachesdeveloping countries while promoting clean energy and climate
resilience.
The challenge is significant. Despite boasting over 70% of global
growth, Asia-Pacific economies remain heavily reliant on fossil
fuels like coal. The region's carbon footprint continues to rise,
exceeding 58% of global emissions in 2021. This necessitates a
substantial shift towards renewable energy sources and climateresilient infrastructure. Here's where MDBs can make a significant
impactbyfunneling
resources
into
clean
energyprojects,
supporting adaptation measures, and assisting countries in meeting
their climate pledges.
However, simply throwing money at the problem isn't enough. MDBs
need to ensure their climate finance leverages limited resources
effectively. This involves prioritizing projects that maximize
environmental and social benefits. Accountability and transparency
are also critical. Local communities must be included in decisionmaking processes to ensure projects address their specific needs
and minimize potential disruptions. The following sections of thisreport will delve deeper into the strategies MDBs can employ tooptimize climate finance in the Asia-Pacific region, fostering asustainable future for all. The reports emphasize the importance ofenhancing transparency and accountability in climate financing
initiatives to uphold environmental and social standards, and toensure that funds are directed towards sustainable and climateresilient projects in the Asia-Pacific region.

ADA Chair
Jamila Asanova

ADA Co-Chairs
Linh Phuong Nguyen & Jay Hung

EXECUTIVE SUMMARY
The report entitled "Mobilising Capital, Mitigating Risk: The Roleof IFIs in Advancing Climate Finance in Asia Pacific" emphasizes
the urgency of addressing climate change and the critical role ofInternational Financial Institutions (IFIs) in providing climate
finance to developing countries. Climate finance is highlighted as
essential for supporting the transition to a low-carbon economy,building resilience, and addressing the impacts of climate change.
The importance of mobilizing $100 billion annually from developed
countriesforclimatefinanceindeveloping
countriesisemphasized, with the United Nations Framework Convention on
Climate Change playing a supervisory role in these transfers. The
report underscores the significant role played by IFIs such as theWorld Bank, Asian Development Bank, and others in providing
funding and technical assistance for climate change mitigation andadaptation projects in developing countries. It also acknowledges
the
need
for
greater
accountability,transparency,
andconsideration of local needs and priorities in climate financepractices.
The joint report by Multilateral Development Banks highlights that
MDB climate finance reached a record high in 2022, with close to
USD 61 billion provided for low and middle-income economies,
surpassing the 2025 climate finance targets. Additionally, thedocument critiques the controversial loans provided by IFIs andhighlights
specific
instances
such
as
the
TyphoonHaiyanresponse in the Philippines to underscore the need for greatertransparency, accountability, and consideration of social andenvironmental impacts in IFIs' practices.
Moreover, the report provides recommendations for IFIs to
improve their climate finance practices, including increasingtransparency,
prioritizing
local
needs,
supporting
bottom-up
approaches,
ensuring
environmentalandsocialsafeguards,
promoting gender equality, fostering partnerships, leveraging
private sector investment, and promoting green bonds. It alsoemphasizes the need for greater support for climate resilience,
ecosystem-based approaches, and addressing debt sustainability
issues.
Furthermore,
recommendations
forbetter
IFIs-led
initiatives to address loss and damage caused by climate change
in the Asia Pacific region are outlined, focusing on increasing
funding, enhancing collaboration, capacity building, communitybased approaches, and ensuring accountability, among others.

Lastly, the report emphasizes the need for a comprehensive
approach to addressing long-term challenges, including thoserelatedtogovernance,
financing,andcapacitybuilding
inaddressing loss and damage caused by climate change, while
promoting knowledge-sharing and learning among countries andcommunities.
Overall, the report underscores the critical role of IFIs in
advancing climate finance in Asia, while also highlighting the needfor greater accountability, transparency, and consideration of local
needs and priorities in climate finance practices. It provides
specific recommendations for IFIs to improve their climate financepractices and address loss and damage caused by climate change
in the Asia Pacific region.
Some questions that this report addresses:• What are the key areas that climate finance must be directed
towards, according to the document?
• How do International Financial Institutions (IFIs) play asignificant role in climate finance?
• What are the criticisms and controversies surrounding the climate
finance practices of International Financial Institutions (IFIs) in the
Asia-Pacific region?
• How can International Financial Institutions (IFIs) better address
loss and damage (L&D) caused by climate change in the Asia
Pacific region?

TABLE OF CONTENTS

Foreward
Executive Summary
Introduction
Importance of Climate Finance:
Role of International Financial Institutions:
The World Bank:
Role of the World Bank as Interim Trustee of GCF :The International Finance Corporation:
The Asian Development Bank:
Asian Infrastructure Investment Bank (AIIB) :The New Development Bank:International Monetary Fund (IMF):
Critique of the IFIs for their controversial loans
IFIs led initiatives to address L&D caused byclimate change in the Asia Pacific region
Recommendations
Recommendations for better IFIs-led initiatives toaddress L&D caused by climate change in the Asia
Pacific region:

INTRODUCTION
It’s become unbearably clear that climate change is here andit’s happening right now. Just a quick scroll through the news
feed and we’ll likely see reports of extreme weather events
happening all around the world — from drought in the Horn ofAfrica, to wildfires in Chile, to heat waves across Asia, toflooding in eastern Africa. And that’s just from the first few
months of this year.According to a study from Indian Instituteof Tropical Meteorology[1] There is an increase of 52 percent in the number of cyclones in the Arabian Sea and a 150
per cent increase in Very severe cyclones. This increase has
been linked to rising ocean temperatures and increased
availability of moisture under global warming.
Climate change is a global challenge that requires urgent andambitious action including urgent and sustainable financing
from all countries to support climate change mitigation andadaptation efforts, critical to the success of the Paris
Agreement
andtheachievementoftheSustainable
Development Goals (SDGs). However, it’s an inequality that
became abundantly clear during the COVID-19 pandemic, withsome countries able to rapidly access the financing and tools
needed to tackle it and quickly bounce back, while others
were left behind and continue to struggle with the pandemic’s
impacts, which is also the case now with climate change. It’s
clear that wealthy countries aren’t immune to the impacts ofclimate-related disasters. But what sets wealthy countries
apart from low-income countries, is that wealthy countries
have the resources to respond and rebuild while low-income
countries don’t. Rich countries are able to borrow at interest
rates of between 1% and 4%, while it’s around 14% for poorer
countries[2]. International Financial Institutions (IFIs), suchas the World Bank, the International Monetary Fund, andregional development banks, play a crucial role in providing
climate finance to developing countries. As the debt mounts
up, it leaves less money available for responding to climate
disasters, building up resilience to future disasters, and forspending on other critical issues like education and healthcare, which becomes a vicious cycle for the debt ridden
countries to further repay the debt. This report discusses theimportance of climate finance and the role of IFIs in
facilitating it.

Importance of Climate Finance:
Climate finance is crucial for supporting the transition to a lowcarbon economy and building resilience in the face of climatechange impacts[3]. It refers to local, national, or transnational
financing drawn from public, private, and alternative sources
that
seek
to
supportmitigation
andadaptation
actions
addressing climate change[4]. The importance of climate
finance lies in its ability to fund large-scale investments
requiredtosignificantly
reduceemissionsandhelp
communities and economies adapt to the inevitable changes
brought about by climate change[5]. The financial needs todeliver on climate goals are substantial, with estimatesindicating that emerging markets and developing economies
other than China will need to invest around $1 trillion per yearby 2025 and around $2.4 trillion per year from 2030[6]. To meetthese needs, climate finance must be directed towards five key
areas: transforming the energy system, building adaptation andresilience, coping with loss and damage, restoring andprotecting natural capital, and methane abatement. While
climate finance has been a central element of global climatechange negotiations since 1992, the target of mobilizing $100
billionayear
fromdeveloped
countriesfordeveloping
countries remains a key goal[7]. Achieving this goal isessential for supporting developing countries in their efforts tomitigate and adapt to climate change, thereby contributing to
the global goal of limiting global warming to well below 2°C
above pre-industrial levels
The United Nations Framework Convention on Climate Change(UNFCCC) supervises transfers from developed to developing
countries, recognizing the global nature of the problem and thehigher costs for developing countries, which are often the mostvulnerable to climate change[8]. Examples of climate financeinclude the Green Climate Fund (GCF), the Special Climate
Change Fund (SCCF), the Least Developed Countries Fund(LDCF), and the UN-REDD Programme. These funds areadministered by multilateral institutions, including developmentbanks and financial institutions, and aim to support climatechangemitigation
andadaptation
actionsindeveloping
countries. Nepal, for example, has utilized international climate
finance to enhance disaster preparedness.

They have scaled up climate-smart agriculture practices toimprove resilience against climate impacts. Additionally, Nepal
has pioneered ecosystem-based solutions through community
forest restoration.The country has set ambitious goals to createcarbon-neutral tourist destinations by 2030[9]The CIF, in partnership with the World Bank Group and othermultilateral investment banks, has mobilized $60 billion inclimate finance. These funds have been used to advance clean
technology, promote energy access, support sustainable forestry,and build climate resilience in 72 countries
Climate finance is critical for supporting the transition towards
low-carbon, climate-resilient development pathways and enabling
countries to adapt to the impacts of climate change. Throughfunding projects and initiatives that promote renewable energy,build resilience, conserve forests, promote green infrastructure,and support climate-resilient agriculture, climate finance cancontribute to a more sustainable and equitable future for all.

Role of International Financial Institutions:
IFIs are uniquely positioned to support the mobilisation andallocation of climate finance due to their extensive expertise infinancial management and development projects. IFIs provide
climate finance through various mechanisms, including grants,
concessional loans, and guarantees. They also support policy
reforms and institutional capacity building to enhance theeffectiveness of climate finance in recipient countries. IFIs arealso involved in designing and implementing innovative financial
instruments, such as green bonds and climate risk insurance, toaddress the unique needs of climate finance.
International Financial Institutions (IFIs) play a significant rolein climate finance, which refers to the financing of climatechange mitigation and adaptation projects. IFIs are multilateraldevelopment banks and financial institutions, such as the World
Bank, Asian Development Bank, and European Investment Bank,
that provide funding and technical assistance for development
projects in developing countries. IFIs have the capacity tomobilise finance, providing technical assistance, supporting
capacity building efforts, promoting policies and regulations, andcollaborating and coordinating with other actors in the climate

finance ecosystem. By doing so, IFIs can help developing
countries address the challenges posed by climate change andachieve sustainable and equitable development.

Figure:1

Source:https://www.linkedin.com/posts/new-developmentbank_emdcs-ndbimpact-activity-7119627220993667074-EqKp/
A joint report by Multilateral Development Banks finds that MDB
climate finance reached a new record high in 2022. MDBs
provided close to USD 61 billion for low and middle-income
economies in 2022. The amount of mobilised global private
finance stands at $69 billion up from $41 billion in 2021.With therecord 2022 climate finance volumes, MDBs are surpassing (forthe second year in a row) the 2025 climate finance targets they
set themselves at the UN Secretary General’s Climate Action
Summit in 2019. This included delivering an expected collective
total of $50 billion climate finance for low-income and middleincome economies, at least $65 billion of climate financeglobally, with an expected doubling in adaptation finance to $18
billion; and private mobilisation of $40 billion[10].

FIGURE:2

Source:https://www.ndb.int/news/multilateral-developmentbanks-provide-record-climate-finance-of-close-to-usd-61-billionfor-low-and-middle-income-economies-in-2022/

International Financial Institutions (IFIs) play a crucial role inclimate finance. They provide funding and technical assistance forclimate change mitigation and adaptation projects in developing
countries. Here are some examples of the role of IFIs in climate
finance, which is also based on ADA’s mapping on five IIFIs,
namely, World Bank, Asian Development Bank, Asian Infrastructure
Investment Bank , New Development Bank and International
Monetary Fund.

The World Bank:
The World Bank has committed to providing climate finance inAsia, with a focus on supporting countries in their efforts to
reduce carbon emissions and build adaptive capacity. Between
2013 and 2020, $113 billion in climate finance was committed toSouth and Southeast Asia, with 47% provided through bilateralfinance and 53% from multilateral sources[11]. Of this, the WorldBank contributed $30 billion in climate finance attributable todeveloped
countrysources,with$15.1
billionfromtheInternational Bank for Reconstruction and Development (IBRD) and$15.0 billion from the International Development Association (IDA)[12]. The World Bank's commitment to climate finance in Asia isreflected in its efforts to support mitigation and adaptation
objectives. Over the period 2013-2020, two-thirds of climate
finance in Asia was directed to mitigation objectives, while onethird was allocated for adaptation[13]. The bank has also
recognized the importance of addressing the adaptation funding
gap, as the cost of recovery from climate-related losses anddamages will continue to mount if not adequately addressed
In addition to its financial commitments, the World Bank is working
to mobilize private sector investments in climate-smart sectors.
The International Finance Corporation (IFC), a member of theWorld Bank Group, is committed to growing its climate-related
investments to an annual average of 35% of its own-account longterm commitment volume between 2021 and 2025[14]. IFC is also
working to align 85% of its new investment projects with theobjectives of the Paris Agreement starting July 1, 2023, and 100%of these investments starting July 1, 2025. The World Bank's
commitment to climate finance in Asia is also evident in its
support for sustainable development initiatives in the region. The
bank is working to promote sustainable development practices,protect natural areas, and find innovative financing mechanisms to
support the transition to a low-carbon economy[15].

By working closely with countries in the region, the World Bank
aims to foster sustainable development, mitigate climate risks, andcreate opportunities for green growth that benefit both theenvironment and local communities.
The World Bank has committed to providing $200 billion in climate
finance for the period of 2021-2025. This funding will support
climate change mitigation and adaptation projects in developing
countries,
includingrenewableenergyprojects,
sustainabletransportation systems, and climate-resilient infrastructure.

Role of the World Bank as Interim Trustee of GCF :The World Bank plays a role in the Green Climate Fund (GCF) as
the interim trustee, managing the fund's financial assets for an
initial three years. The World Bank is responsible for managing
contributions
andinvestments,
providingservicessuchascommitment accounting, cash transfers, and financial reporting.
However, it is not responsible for allocating funds or preparing,appraising, supervising, or reporting on GCF-financed activities.
The World Bank has expressed interest in playing a larger role thanjust managing financial assets in the future. The GCF secretariat
was asked to prepare six papers on the key issues relating to the
Fund's business model framework, and some of these papers were
written with the support of external consultants, among them former
and even current World Bank staff. The World Bank plans to seek
accreditation to become an implementing entity of the GCF[16].

The International Finance Corporation:
The International Finance Corporation (IFC) is the private sector
arm of the World Bank Group, dedicated to ending extreme poverty
and boosting prosperity on a livable planet[17]. IFC advances
economic development and reduces poverty by investing in projects
and private sector firms in developing countries, with a focus on
creating markets and increasing private sector involvement indeveloping countries[18]. IFC provides various financial products,
includingloans,
equity,trade
finance,structured
finance,syndication, advisory services, and asset management, to promotesustainable and inclusive economic growth in emerging markets.
IFC's investments aim to create positive impacts alongside
financial returns, with a commitment to align all investments with

with the Paris Agreement starting in July 2025 and a target to
devote 45% of annual financing to climate by 2025. IFC's use ofproceeds
guidelines
reflects
its
development
mandateandcommitment to sustainability[19]. IFC is committed to growing its
climate-related investments to an annual average of 35% of its
own-account long-term working with financial institutions tofinance projects that will support mitigation and adaptation.
IFC also focuses on gender equality and reducing gaps between
men and women in the private sector, including financial support
for women entrepreneurs and women-led SMEs. In FY22, IFC
committed a record $32.8B to private companies and financial
institutions in developing countries, including $4.4B in climate
financing and $9.7B in trade finance, with 75% invested inInternational
Development
Association(IDA)
countries
andconflict-affected situations[20].

The Asian Development Bank:
Tackling climate change, building climate and disaster resilience,and enhancing environmental sustainability is an operational
priority in ADB's Strategy 2030[21]. ADB is committed to ensurethat 75% of the number of its committed operations (on a 3-year
rolling average) will be supporting climate change mitigation
and/or adaptation by 2030 and climate finance from ADB’s own
resources to reach $80 billion cumulatively from 2019 to 2030. In
2021, ADB announced it is elevating its cumulative climate
finance ambition to $100 billion by 2030.
In 2022, ADB committed $7,110 million in climate finance. Of thistotal, $4,279 million (60.2%) is expected to contribute to climatechange mitigation and $2,831 million (39.8%) to climate change
adaptation, which is the highest adaptation finance committed
since reporting began in 2011. ADB provided $6,723 million fromits own resources and mobilized $387 million from external
resources.

FIGURE:3

Asian Infrastructure Investment Bank (AIIB) :According to a latest report by Recourse, BRICS Feminist Watch
and CLEAN the AIIB is up to the challenge to address the climate
crisis in policy and practice, including the urgent need toaccelerate the shift from fossil fuels to sustainable renewableenergy that puts people and the planet at the heart ofdevelopment. Public finance is scarce and must be usedefficiently and effectively to target priority sectors to enable thejust energy transition. Apart from providing project finance, MDBs,
like the AIIB, are triple A credit rated and bring confidence forother investors to contribute. MDBs’ private sector operations
mobilise capital from other lenders and investors - both private
and public. MDBs also act as standard-setters – bringing social
andenvironmental
safeguards
intodevelopment
project
implementation

Figure -4
The AIIB’s Energy Sector investments as of end of January 2023

Source:AsianInfrastructure
Investment
Bank,https://www.aiib.org/en/projects/list/year/All/member/All/sector/Energy/fi
nancing_type/All/status/Approved,
https://re-course.org/wpcontent/uploads/2023/03/Beyond-Paris-How-AIIB-can-align-policiespractices-to-climate-challenge-March-2023.pdf

The AIIB is currently developing a methodology to align its
investments with the Paris Agreement on climate change, with adeadline of July 2023. While the goal of the Paris Agreement - ofkeeping global warming to below 1.5°C - is essential, the content of
the Agreement and the country pledges that contribute to it are
insufficient as theywould result in at least 2.4°C warming. This is why this report calls
for the AIIB to go ‘beyond Paris’.The report finds several obstacles
for the AIIB to realise its stated climate ambitions, in both its
policies and practice, including several missed opportunities to betruly transformational. As of the end of January 2023, the AIIB had
invested almost $2.4 billion in gas projects, excluding indirect
finance, representing almost 40 percent of its energy portfolio. The
updated Energy Sector Strategy paves the way for further support
for fossil gas, classifying it as a transition energy source. In
December 2022, the AIIB’s President approved an investment of$110 million for the Unique Meghnaghat IPP, a 584 Megawatt (MW)greenfield gas power plant in Bangladesh. The AIIB labelled thishuge new fossil fuel project ‘Paris aligned’.
As the AIIB finalises its Paris alignment methodology, it is criticalthat it learns from these concerning developments. The AIIB’s
methodology should be based on the premise that public financemust prioritise sustainable renewable energy, stop funding fossil
fuels and end consideration of gas as a transition fuel. The timeleft to achieve this shift necessitates urgent action, and scarcepublic funds should no longer prop up dirty and outdated
technologies. But the methodology must also be built on principles
of climate justice and rights. Given the limited scale of public
investment resources for sustainable development and climate
finance, it is a matter of efficiency, effectiveness and equity that itneeds to set the highest bar with respect to good governance;
applying, safeguarding and advancing environmental and social
standards; and actively promoting social inclusion and poverty
reduction, gender-responsiveness and human rights. For climate
finance and truly Paris-aligned investments should fulfil threefundamental criteria:
It must not support fossil fuels;
It must do no harm by preventing human rights abuses andnegative social and environmental impacts;

It should aim to do good by addressing inequalities andgenerating broader benefits for affected people and communities,
creating
accountability
forsustainedclimateimpacts
andcontributing to larger paradigm shifts in the financial system.
Finally, AIIB need to open up its Paris alignment methodology for
public consultation. How the AIIB aligns its investments with Paris
is a matter of public interest and should therefore be subject topublic scrutiny and input. The EBRD has shown that it is possible and preferable - to invite public comment on its methodology, and
the AIIB should do the same in the short time it has left before the 1
July 2023 deadline.

The New Development Bank:
The New Development Bank (NDB) has made significant strides inclimate finance, with its joint report with Multilateral Development
Banks (MDBs) revealing that MDB climate finance reached a newrecord high in 2022[22] . This commitment to climate finance is
crucial for supporting the transition to a low-carbon economy andbuilding resilience in the face of climate change impacts. The NDB,
along with other MDBs, has set ambitious climate finance targets to
help low- and middle-income economies transition to a low-carbon
economy. For instance, the NDB set a climate finance target of 35%
oftotal
financialcommitment
by
2025,
while
the
Islamic
Development Bank (IsDB) committed to a climate finance target of
35% of total financial commitment by 2025[23]. The African
Development Bank (AfDB) provided 62% ($2.3 billion) of their total
climate finance in 2022 for adaptation, increasing its overall financefor adaptation by 47% ($0.7 billion) from 2021. However, despite
these efforts, MDBs need to review and increase the ambition of
their climate finance targets. MDBs hit their collective goal of $50
billion in climate finance for low- and middle-income economies by2025 four years ahead of schedule and surpassed it by over 20% in
2022[24]. Therefore, it is essential for MDBs to strategize together
and set more ambitious targets to support the transition to a lowcarbon economy and build resilience in the face of climate change
impacts.

International Monetary Fund (IMF):
The International Monetary Fund (IMF) recognizes the criticalimportance of climate finance in the Asia-Pacific region as it
transitions toward a sustainable future. The International Monetary
Fund (IMF). The IMF emphasizes the importance of mobilizing
private capital to address climate challenges, especially as publicfinances have been strained by the global pandemic. To bridge thefinancing gap, the IMF advocates for a coordinated approach
involving various stakeholders, including governments, central
banks, financial supervisors, and multilateral institutions. The IMF
highlights the urgency of incorporating climate considerations into
financial frameworks, asset purchases, and reporting requirements
to foster the development of green markets and ensure transparent
and efficient climate finance mechanisms[25]. Despite driving global
growth, the region’s heavy reliance on coal has resulted insignificant greenhouse gas emissions. To meet climate mitigation
and adaptation needs, emerging and developing Asia requires anannual investment of at least $1.1 trillion. However, the actual
investment falls short by approximately $800 billion[26].
To unlock more climate finance in Asia, the IMF recommends
comprehensive enhancements to data frameworks, taxonomies, anddisclosures, alongside measures to phase out fossil fuel subsidies
and expand carbon pricing. Strengthening macroeconomic and public
investment management is crucial to reduce risk premiums, attract
private capital, and drive economic growth. Central banks andfinancial supervisors are encouraged to promote global standards
for transparency, conduct climate risk analyses, and integrate
climate-related
financial
risks
into
prudential
frameworks.
Collaboration with multilateral standard setters is essential toenhance clarity, trust, and understanding in evaluating climaterelated financial risks and opportunities

Critique of the IFIs for their controversial loans
International Financial Institutions (IFIs) have faced significant
criticism for their controversial loans in the Asia-Pacific region.
These loans often lack transparency, accountability, and proper
assessment of social and environmental impacts. Critics argue that
IFIs prioritize economic growth over sustainable development,
leading to projects that harm local communities, ecosystems, andcultural heritage. Additionally, conditionalities attached to loans

can exacerbate inequality and undermine democratic processes.
The
challengelies
inbalancing
economic
progresswithresponsible lending practices and ensuring that IFIs uphold theircommitment to social and environmental well-being. Critics also
argue that these institutions prioritize the interests of wealthy
nations over those of the borrowers, often leading to bail-outs forWestern multinational corporations rather than improving the wellbeing of local communities
Typhoon Haiyan and the World Bank: In 2013, Typhoon Haiyan
struck the Philippines, causing widespread damage and loss oflife. In the aftermath of the disaster, the World Bank provided a$500 million loan to the Philippine government to support disasterrecovery and reconstruction efforts. However, the loan was
criticized for prioritizing infrastructure projects over the needs ofaffected communities, and for failing to adequately consult withlocal communities and indigenous peoples. The World Bank
Group's response to Typhoon Haiyan has also been criticized forits lack of transparency and accountability, particularly in its
investments
infinancialintermediaries(FIs).
Thislackoftransparency makes it difficult for communities and civil society tobring cases to the Compliance Advisor Ombudsman (CAO), which
undermines accountability and makes it harder to address negative
impacts on affected communities[27]Amplifying accountability gaps
Across the board, the current approach of most MDBs towards
accountability and transparency issues is lacking. Rather thanproposing to fix these issues, the MDB reform agenda isincreasingly focused on bypassing safeguards, cutting "red tape,"and enabling MDBs to disburse money faster without adequate
consideration of the potential risks to human rights. One way thisis happening is through project approval processes, where the G20
has urged MDBs to "consistently and more widely apply a riskbased approach" that delegates more decision-making power tomanagement, away from government shareholders and Board
members. These include for example, whether a project is the firstin a sector or a country, and whether the project is above a certain
monetary threshold (currently $300m for a sovereign project,$150m for a non-sovereign project, and $35m for an equity
investment). However, such thresholds are not meaningful in terms

of potential harms to local communities and the environment. For
example, the AIIB approved a controversial gas power plant in
Bangladesh, Unique Meghnaghat, with significant negative impacts
on local communities, including undermining gender equality, as
well as the environment. In addition, public disclosure standards at
AIIB are extremely weak, with there being no indication of which
projects are to be delegated to presidential approval[28]. This
undermines the chain of accountability, as Board members are
responsible for ensuring MDBs uphold their environmental andsocial standards, and the devolution of the approval process limits
the ability of civil society and affected communities to raise
concerns with their representatives.
Additionally, the shift towards "greater use of country systems" canbeproblematic,asthestandards
andregulationsofmanydeveloping countries may not align with international best practices,
potentially leading to weaker environmental and social safeguards
implementation. This approach could result in projects being
approved in countries with lax regulations, leading to adverse
environmental and social impacts. Furthermore, relying solely on
countrysystemsmaycompromisetheaccountability
andtransparency of MDB-funded projects, as international standards
often incorporate mechanisms for public participation, grievance
redressal, and independent monitoring that may not be present innational regulatory frameworks.
Example of Mekong River Delta- Need for greater accountability
and transparency in climate finance practices
The Annual Mekong Hydrology, Flood, and Drought Report 2019,
published by the Mekong River Commission (MRC), sheds light on
the condition of the Mekong Basin during that year. It highlights
unprecedented flow conditions in the Mekong mainstream and its
tributaries, as well as erratic climatic fluctuations ranging fromextreme dry to extreme wet. The severe droughts in the Lower
Mekong Basin caused substantial economic losses, impacting
agriculture,theenvironment,
andpeople’s
livelihoods[29].
Additionally, the collapse of a dam in Laos exacerbated thesituation, leading to widespread flooding downstream in countries
like Cambodia and Vietnam, resulting in loss of life and damage tocritical infrastructure and ecosystems[30].

The dam was funded by international investors, including Thaibanks, and was built by a Chinese construction company. The dam
was part of a larger push towards hydropower development in the
Mekong region, which has been driven by international financial
institutions such as the Asian Development Bank.
Critics have argued that the push towards hydropower developmentin the Mekong region has been driven by the interests of foreign
investors,
rather
than
the
needs
and
prioritiesoflocal
communities. The development of dams in the Mekong region has
led to the displacement of local communities, the loss of
livelihoods, and the destruction of ecosystems, which has in turncontributed to the vulnerability of downstream communities to theimpacts of climate change.
The Mekong River disaster highlights the need for greater
accountability and transparency in climate finance practices. It
also underscores the importance of ensuring that climate financeprojects prioritize the needs and priorities of local communities
and are consistent with environmental and social safeguards. The
disaster serves as a reminder that climate finance must be used
responsibly and must prioritize the well-being of people andecosystems in the face of climate change.

Continued support for fossil fuelsMultilateral Development Banks (MDBs) have pledged to support
the goals of the Paris Agreement on climate change. However,their actions don't always reflect these commitments. Despite
promises to phase out fossil fuel funding, the World Bank alone
has invested nearly $15 billion directly in fossil fuel projects since
2015[31]. Even recent years see MDBs allocating significant
resources, with the World Bank averaging $1.2 billion annually forfossil fuels, with a focus on gas projects.
Current
reformdiscussions
seem
inadequate.
While
some
initiatives address early coal phase-out in low-income countries,
they fail to address the broader issue of ongoing support for coaland gas projects through various means. Loopholes like excluding"captive coal" from restrictions and not considering financing
through intermediaries allow coal projects to continue.

Additionally, MDBs haven't addressed existing clients who keep
funding new coal projects. These gaps highlight the need forstricter policies and better enforcement before MDBs can claim
true alignment with the Paris Agreement's goals. The continued
support for gas projects under the guise of a "bridge fuel" further
undermines their commitment to climate action. MDBs need tomove away from fossil fuels altogether to become institutions that
truly promote sustainable development.

IFIs ledinitiatives to address L&D
change in the Asia Pacific region

causedbyclimateThese initiatives provide financial and technical support tovulnerable countries and communities to help them adapt to theimpacts of climate change and reduce the risk of L&D.
Climate Investment Funds (CIF): The CIF is a partnership ofmultilateral development banks, including the World Bank and
the Asian Development Bank (ADB). The CIF has established
two funds, the Clean Technology Fund (CTF) and the Strategic
Climate Fund (SCF), which provide financial resources tosupport climate change mitigation and adaptation projects,
including those aimed at addressing L&D.
Green Climate Fund (GCF): The GCF is an international fundestablished to provide financial resources to support climatechangemitigation
andadaptation
projects
indeveloping
countries. The GCF aims to support projects that address the
L&D caused by climate change, particularly in vulnerable
countries and communities.
Asia-Pacific Economic Cooperation (APEC) Climate Center:
The APEC Climate Center is an international organization
established to provide climate information and services tocountries in the Asia Pacific region. The center provides
technical assistance and capacity building support to countries
to help them address the L&D caused by climate change.
Adaptation Fund: The Adaptation Fund is an international fundestablished under the United Nations Framework Convention on
Climate Change (UNFCCC) to support adaptation projects indeveloping countries. The fund provides financial resources tohelp vulnerable countries and communities address the L&D
caused by climate change.

Asian Development Bank (ADB): The ADB has established several
initiatives to support climate change adaptation and mitigation
projects in the Asia Pacific region. The ADB's Climate Change andDisaster Risk Management (CCDRM) program provides technicalassistance and financial resources to help countries in the region
address the L&D caused by climate change.
1. Pacific Climate Finance Facility (PCFF): The PCFF is a fundestablished by the Asian Development Bank (ADB) and the Green
Climate Fund (GCF) to provide financing for climate change
adaptation and mitigation projects in the Pacific region. The
PCFF aims to support projects that address the loss and damage
caused by climate change, particularly in vulnerable islandstates.
2. ASEAN
Disaster
Risk
FinancingandInsurance
Program(ADRiFi):The
ADRiFiisa
programestablishedbythe
Association of Southeast Asian Nations (ASEAN) to provide
financial protection against the impacts of natural disasters,
including those caused by climate change. The program aims tohelp countries in the region recover from the loss and damage
caused by disasters, including climate-related disasters.
3. Climate Risk and Early Warning Systems (CREWS) PacificProject: The CREWS Pacific Project is a fund established by theUnited Nations Development Programme (UNDP) to support thedevelopment of climate risk and early warning systems in the
Pacific region. The project aims to reduce the loss and damage
caused by climate change, including by providing early warningof extreme weather events and supporting disaster preparedness
and response.
4. Climate and Disaster Risk Reduction Financing Facility(CDRRFF): The CDRRFF is a fund established by the World Bank
to provide financing for disaster risk reduction and climatechange adaptation projects in the Asia Pacific region. The facility
aims to support projects that address the loss and damage
causedbyclimatechange,particularlyinvulnerable
communities.
5. Climate Change Adaptation Fund (CCAF): The CCAF is a fundestablished by the Ministry of Environment and Tourism ofMongolia to support climate change adaptation projects in
Mongolia. The fund aims to support projects that address the loss
and damage caused by climate change, particularly in rural andremote communities that are particularly vulnerable to theimpacts of climate change.

Recommendations
Increase transparency and accountability: IFIs should ensurethat their climate finance practices are transparent, and that
there is accountability for the use of funds. For example, theGreen Climate Fund (GCF) publishes detailed information on its
funding
proposals
andproject
implementation,andhasestablished an independent complaints mechanism to ensureaccountability.
Prioritize local needs and priorities: IFIs should prioritize theneeds and priorities of local communities when designing andimplementing climate finance projects. For example, the AsianDevelopment Bank (ADB) works with local communities in thePhilippines to design and implement mangrove reforestation
projects that not only reduce greenhouse gas emissions but also
support the livelihoods of local fisherfolk.
Support bottom-up approaches: IFIs should support bottom-up
approaches to climate finance, which involve engaging with local
communities and building capacity at the local level. For
example, the World Bank's Community Development Carbon Fundsupports community-led projects that reduce greenhouse gas
emissions and promote sustainable development.
Ensure environmental and social safeguards: IFIs should
ensure that all climate finance projects are consistent withenvironmental and social safeguards, and that they do not harm
ecosystems
orcommunities.
For
example,
the
GCF
has
established environmental and social safeguards to ensure thatits projects do not harm the environment or local communities.
Promote gender equality: IFIs should promote gender equality
in their climate finance projects, by ensuring that women are
included in decision-making processes and that the impacts ofclimate change on women are addressed. For example, the ADB's
Gender and Development Cooperation Fund supports projects
that promote gender equality and address the impacts of climatechange on women.
Foster partnerships: IFIs should foster partnerships between
governments, civil society organizations, and the private sector
to ensure that climate finance projects are comprehensive andsustainable. For example, the ADB's Private Sector Operations
Department works with private sector partners to support
renewable energy and energy efficiency projects in the Asia
Pacific region.

Leverage private sector investment: IFIs should leverage
private sector investment in climate finance projects to ensurethat there is sufficient funding to address the scale of theclimate challenge. For example, the International FinanceCorporation (IFC), a member of the World Bank Group, supports
private sector investment in renewable energy and energy
efficiency projects in the Asia Pacific region.
Supportlow-carbon
development
pathways:
IFIs
shouldsupport low-carbon development pathways, which prioritize
renewableenergy,energyefficiency,
andsustainabletransportation. For example, the ADB's Sustainable Transport
Initiative supports sustainable transportation projects in the
Asia Pacific region.
Build resilience: IFIs should support climate resilience byinvesting in adaptation projects that help communities adapt to
the impacts of climate change. For example, the GCF supports
projects
thatpromoteclimateresilienceinvulnerable
communities, such as a project in Bangladesh that improveswater management and reduces the impacts of flooding.
Support ecosystem-based approaches: IFIs should support
ecosystem-based
approaches
toclimatefinance,whichprioritize the protection and restoration of ecosystems as ameans of reducing greenhouse gas emissions and building
resilience. For example, the GCF supports ecosystem-based
adaptation projects, such as a project in Fiji that restores
coastal ecosystems and improves community resilience toclimate change.
Promote green bonds: IFIs should promote the use of green
bonds as a means of financing climate change mitigation andadaptation projects. For example, the ADB issued its first green
bond in 2015 to fund renewable energy and energy efficiency
projects in the Asia Pacific region.
Increase public awareness: IFIs should increase publicawareness about the impacts of climate change and theimportance of climate finance, and engage with the public toensure that climate finance projects are aligned with theirneeds and priorities.
Addressdebt
sustainability:
IFIs
shouldaddressdebt
sustainability issues in their climate finance projects, to ensurethat countries are not burdened with unsustainable debt.
Encourage innovation: IFIs should encourage innovation inclimatefinance,bysupportingnew
technologies
andapproaches to climate change mitigation and adaptation.

Ensure long-term sustainability: IFIs should ensure that theirclimatefinanceprojects
aredesignedforlong-term
sustainability, and that they contribute to the achievement of the
Sustainable Development Goals.
Recommendations for better IFIs-led initiatives to address
L&D caused by climate change in the Asia Pacific region:
Increase funding for L&D: IFIs should increase their financial
resources and funding for L&D projects and programs in the Asia
Pacific
region,particularlyinvulnerable
countries
andcommunities.
Strengthen
collaboration
andcoordination:
IFIsshouldstrengthen collaboration and coordination with national andlocal
governments,
civilsocietyorganizations,
and
other
stakeholders to better understand and address the L&D causedby climate change.
Enhance capacity building: IFIs should enhance capacity
building efforts to build the skills and knowledge of countries
and communities to address L&D caused by climate change. This
could include training programs, workshops, and technicalassistance.
Promote community-based approaches: IFIs should promote
community-based approaches to address L&D caused by climatechange. This could include supporting local initiatives andempowering communities to develop and implement their own
adaptation and mitigation strategies.
Prioritize the most vulnerable: IFIs should prioritize the mostvulnerable countries and communities in the Asia Pacific region
when allocating funding and resources for L&D projects andprograms.
Ensure accountability: IFIs should ensure accountability for
L&D initiatives by establishing clear monitoring and evaluation
mechanisms and reporting frameworks.
Support gender-responsive approaches: IFIs should support
gender-responsive approaches to address L&D caused byclimate change, recognizing the unique vulnerabilities andcontributions of women in the region.
Foster innovation: IFIs should foster innovation in L&D
initiatives by supporting new and emerging technologies andapproaches.
Consider multiple perspectives: IFIs should consider multiple
perspectives
in
their
L&D
initiatives,
includingthoseofindigenous peoples, youth, and other marginalized groups.

Support policy and institutional frameworks: IFIs should
support policy and institutional frameworks that promote climate
resilience and address L&D caused by climate change
Address social and cultural dimensions: IFIs should address
the social and cultural dimensions of L&D caused by climatechange, recognizing the diverse cultural contexts of the region.
Ensure participatory decision-making: IFIs should ensure
participatory decision-making in L&D initiatives by involving
affectedcommunities
inthedesign,implementation,
andmonitoring of projects and programs.
Build partnerships: IFIs should build partnerships with otherorganizations and stakeholders to leverage resources andexpertise in addressing L&D caused by climate change.
Promote knowledge-sharing: IFIs should promote knowledgesharing and learning among countries and communities tosupport the development of effective L&D initiatives.
Address long-term challenges: IFIs should address long-term
challenges in addressing L&D caused by climate change,
including those related to governance, financing, and capacity
building.

REFERENCES
1. https://www.downtoearth.org.in/news/climate-change/here-is-why-cyclone-biporjoyintensified-into-an-extremely-severe-cyclonic-storm-89980
2. https://www.weforum.org/agenda/2023/01/barbados-bridgetown-initiative-climatechange/?
DAG=3&gclid=CjwKCAjwhJukBhBPEiwAniIcNfBcSPERJ4oxa72QGtOzSFfcsVJvyQgEJPWh
LIHafdOZRYSobk2Y8xoCwM4QAvD_BwE
3. https://globaldev.blog/climate-finance-what-is-it-how-much-do-we-need-and-should-itcover-losses-and-damages/
4. https://unfccc.int/topics/introduction-to-climate-finance
5. https://www.ifad.org/en/web/latest/-/why-climate-finance-matters-your-questionsanswered
6. https://www.lse.ac.uk/granthaminstitute/explainers/what-is-climate-finance-and-wherewill-it-come-from/
7. https://globaldev.blog/climate-finance-what-is-it-how-much-do-we-need-and-should-itcover-losses-and-damages/
8. https://www.iberdrola.com/sustainability/what-is-climate-finance
9. https://www.un.org/en/climatechange/why-finance-climate-action
1 0 .h t t p s : / / w w w . l i n k e d i n . c o m / p o s t s / n e w - d e v e l o p m e n t - b a n k _ e m d c s - n d b i m p a c t - a c t i v i t y 7119627220993667074-EqKp/
1 1 .h t t p s : / / o x f a m i l i b r a r y . o p e n r e p o s i t o r y . c o m / b i t s t r e a m / h a n d l e / 1 0 5 4 6 / 6 2 1 4 4 5 / b p - c l i m a t e finance-in-asia-011122-en.pdf
1 2 .I b i d
1 3 .[ I b i d
1 4 .h t t p s : / / w w w . i f c . o r g / e n / w h a t - w e - d o / s e c t o r - e x p e r t i s e / f i n a n c i a l - i n s t i t u t i o n s / c l i m a t e finance
1 5 .I b i d
1 6 .[ h t t p s : / / w w w . b r e t t o n w o o d s p r o j e c t . o r g / 2 0 1 3 / 0 6 / a r t - 5 7 2 6 4 5 /1 7 .h t t p s : / / w w w . i f c . o r g / e n / a b o u t / i n v e s t o r - r e l a t i o n s
1 8 .[ h t t p s : / / w w w . t r a d e c o m m i s s i o n e r . g c . c a / d e v e l o p m e n t - d e v e l o p p e m e n t / 1 5 6 6 7 6 . a s p x ?
lang=eng
1 9 .h t t p s : / / w w w . i f c . o r g / e n / a b o u t / i n v e s t o r - r e l a t i o n s
2 0 .[ h t t p s : / / w w w . t r a d e c o m m i s s i o n e r . g c . c a / d e v e l o p m e n t - d e v e l o p p e m e n t / 1 5 6 6 7 6 . a s p x ?
lang=eng
2 1 .h t t p s : / / w w w . a d b . o r g / n e w s / i n f o g r a p h i c s / c l i m a t e - f i n a n c e - 2 0 2 2
2 2 .[ h t t p s : / / w w w . l i n k e d i n . c o m / p o s t s / n e w - d e v e l o p m e n t - b a n k _ e m d c s - n d b i m p a c t - a c t i v i t y 7119627220993667074-EqKp/
2 3 .[ h t t p s : / / w w w . m i g a . o r g / s i t e s / d e f a u l t / f i l e s / 2 0 2 1 - 0 8 / 2 0 2 0 - J o i n t - M D B - r e p o r t - o n - c l i m a t e finance_Report_final-web.pdf
2 4 .h t t p s : / / w w w . w r i . o r g / i n s i g h t s / m d b - c l i m a t e - f i n a n c e - j o i n t - r e p o r t - 2 0 2 2
2 5 .[ h t t p s : / / w w w . i m f . o r g / e n / B l o g s / A r t i c l e s / 2 0 2 4 / 0 1 / 2 9 / e x p l a i n e r - h o w - a s i a - c a n - u n l o c k - 8 0 0 billion-of-climate-financing
2 6 .h t t p s : / / w w w . i m f . o r g / e n / P u b l i c a t i o n s / D e p a r t m e n t a l - P a p e r s - P o l i c y Papers/Issues/2024/01/29/Unlocking-Climate-Finance-in-Asia-Pacific-Transitioning-toa-Sustainable-Future-541458
2 7 .h t t p s : / / w w w . t h e g u a r d i a n . c o m / w o r l d / 2 0 1 3 / n o v / 1 8 / t y p h o o n - h a i y a n - p h i l i p p i n e s - f e a r s - n o t all-survivors-reached
2 8 .h t t p s : / / r e - c o u r s e . o r g / w p - c o n t e n t / u p l o a d s / 2 0 2 4 / 0 4 / B i g - B a n k - T h e o r y _ W h y - M D B s - n e e d - t o rethink-what-it-means-to-be-bigger-better-and-bolder-development-banks.pdf
2 9 .[ A n n u a l M e k o n g H y d r o l o g y , F l o o d a n d D r o u g h t R e p o r t 2 0 1 9 : D r o u g h t i n t h e L o w e r
Mekong Basin
3 0 .[ “ D a m s a n d d r o u g h t s , d a t a a n d d i p l o m a c y i n t h e M e k o n g ”
3 1 .[ h t t p s : / / w w w . t h e g u a r d i a n . c o m / e n v i r o n m e n t / 2 0 2 4 / a p r / 0 9 / w o r l d s - b i g g e s t - e c o n o m i e s pumping-billions-into-fossil-fuels-in-poor-nations