Development banks agree climate finance framework

Leading development banks have finalised a set of climate finance parameters, in a crucial step towards a historic UN global climate deal due to be signed in Paris later this year.

The set of “Common Principles” are backed by the World Bank, International Development Finance Club (IDFC) and Agence Francaise de Developpment and highlight the investments than can qualify as climate friendly.

The document was released last week and includes a range of projects covering energy efficiency, renewables and forestry that address greenhouse gas emissions.

The new document calls for banks not to exaggerate the investment being channelled into clean energy projects, and to only report investment that directly enables emissions reduction.

Signatories include the top development banks in China, India, Brazil, South Africa, Japan and Mexico who control assets worth a combined US$ 2,100 billion, with financing commitments of $390 billion in 2010.

In a statement Ulrich Schröder, Chairperson of IDFC and Chief Executive Officer of KfW Bankengruppe, said the agreement is a “major milestone in the fight against climate change.”

Rachel Kyte, vice president at the World Bank group and special envoy for climate change, said common aims and targets across financial organisations was key to “build trust”.

Kyte said: “Our ability as multilateral, national and bilateral development institutions to tell a shared story will provide an essential piece of the climate finance jigsaw puzzle.”

National governments have so far not been able to agree a common definition of how funds for climate action investments should be used which has led to concerns that the level of clean energy funding for developing nations has been exaggerated.