Climate Action 2014-2015

CLIMATE FINANCE
"It is imperative to factor in
climate change mitigation and
adaptation in all long-term
investment decisions across the
IDB’s wide portfolio."
and clients alike is on the need to shift
development and investment pathways
of whole sectors and economies,
contributing to transformational change.
This poses new challenges to MDBs,
which must take a more comprehensive
approach to collaboration with
government and private sector clients.
As responsive climate finance institutions,
MDBs therefore have to engage in a
range of initiatives including: building
capacity and supporting enabling
environments; strengthening climate
finance in public and private financial
institutions; and leveraging and deploying
climate finance, in particular catalysing
private finance. Doing all this in a
coherent manner requires an institutional
strategy for mainstreaming climate change
in MDB operations, as well as specific
measures to ensure transparency and
accountability, including through tracking
of climate finance.
IDB operates in the Latin America
and the Caribbean region (LAC),
which is both committed to and has
vast opportunities for low-carbon
development, at the same time facing
pressing needs to enhance climate
resilience and take measures to adapt
to unavoidable climate change. There
is widespread understanding in LAC
of the multiple benefits of actions that
simultaneously address climate and
national priority concerns such as
competitiveness, energy security, health
and environmental protection; in short,
advancing towards sustainable economic
development. The IDB approach to
addressing climate change is reflected in
the IDB Climate Strategy and its Action
Plan (2012-2015) (see http://publications.
iadb.org/handle/11319/2065?localeattribute=en).
It is imperative to factor in climate
change mitigation and adaptation in all
long-term investment decisions across
the IDB’s wide portfolio. Thus, a key
challenge we face is mainstreaming
climate change across sectors and linking
it to cross-cutting priorities such as
indigenous people and gender issues.
An important tool to make this happen
is our environmental safeguard policies,
whose goal is to systematically reduce
the climate impacts of all projects and
ensure that climate change-related issues
are identified and addressed early on in
the project cycle.
ASSISTANCE FOR
INSTITUTIONAL REFORM
Enabling environments are needed to
encourage investments in climate change
mitigation and adaptation. The IDB
provides assistance for macroeconomic,
sectoral and institutional reforms required
to ensure the development of strong
regulatory frameworks. These frameworks
provide the necessary incentives to
integrate climate change in national
development planning, and promote
investments in low-carbon and climate
resilient activities. Interventions may:
Improve the analytical basis for
policy development (identifying
low-carbon and climate-resilient
investment opportunities, and
factoring in economics of climate
change, vulnerability assessments and
greenhouse gas inventories).
Identify institutional gaps and the
need for capacity building and
strengthening programmes.
Promote policy transformation through
programmatic policy-based loans.
A programmatic policybased
loan in Peru. This
programme helps consolidate
the country’s institutional
and regulatory framework,
while mainstreaming climate
change in development
planning and investment, and
building capacity in the leading
institutions including the
development of standardised
management tools. Three
loans totalling US$75 million
have facilitated the active
engagement of the Ministry of
Economy and Finance and the
development of sector climate
change strategies in key line
ministries. For example, the
programme helps pave the
way for and move forward
with a US$704 million risk
management and climate
change adaptation plan in the
agricultural sector for 2012-2021.
A comprehensive fiscal
sustainability and climate
change adaptation
programme in El Salvador. A
US$200 million loan supports
the El Salvador government in
strengthening the integration
of climate change adaptation
and disaster risk management
in the strategies of key
ministries. This will help the
government respond to
natural disasters, which are
particularly damaging to
agriculture and infrastructure,
two of El Salvador’s most
vulnerable sectors.
ClimateScope. An initiative
piloted by the IDB to enable
policy-makers, investors and
financiers to assess policy,
regulatory and investments at a
country level, the ClimateScope
index provides structured
information for low-carbon
clean energy stakeholders
across value chains. The tool is
now being expanded to have a
global reach.
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