Big Shift coalition open letter to the leaders of the MDBs

To the Multilateral Development Bank Presidents

David Malpass (World Bank Group),

Akinwumi Adesina (African Development Bank),

Masatsugu Asakawa (Asian Development Bank),

Jin Liqun (Asian Infrastructure Investment Bank),

Sir Sumantra Chakrabarti (European Bank for Reconstruction and Development),

Werner Hoyer (European Investment Bank),

Luis Alberto Moreno, (Inter-American Development Bank),

Dr. Bandar M.H. Hajjar (Islamic Development Bank),

and K. V. Kamath (New Development Bank),

As public finance institutions in a time of climate emergency, Multilateral Development Banks (MDBs) have an urgent responsibility and opportunity to align their lending with the Paris Agreement. Doing so will require ending support for all fossil fuels by the end of 2020, rapidly scaling up investments in renewables and energy access, and transparent reporting on finance levels and portfolio emissions.

The nine Multilateral Development Banks[1] have already pledged to align their financial flows with the objectives of the Paris Agreement, first doing so alongside the International Development Finance Club at the One Planet Summit in 2017. The following year, at COP24, the MDBs reiterated this pledge and announced six building blocks for Paris Alignment. This year, at COP25, they have promised to present a detailed approach and report on their progress. But to date, no MDB has come close to acting in line with what is needed, although the European Investment Bank (EIB) is clearly showing leadership in this area.

Signs of the unfolding climate crisis have become increasingly evident since the joint MDB pledge was first made and the MDBs must scale up their ambition at COP25 in Madrid accordingly. To cite just a few examples, this year we have seen record-breaking wildfires in the Amazon, Australia, and the Arctic, unprecedented damage wrought by Hurricane Dorian in the Bahamas, and devastating flooding in Mozambique and across South Asia. Against this backdrop, millions of people are out in the streets of Chile, Haiti, and elsewhere to stand up for democracy, equality, and basic human rights. These struggles are fundamentally connected to the drivers of the climate crisis, and point to the urgent need to chart a path to a society that puts people and planet first.

To align their finance with the Paris Agreement, the Multilateral Development Banks at COP25 must announce their shared commitments to:

• End all assistance for oil, gas, and coal projects after 2020. Building on the ambition in the European Investment Bank’s new energy lending policy, this should include ending assistance for ‘associated facilities,’[2] assistance through advisory services and technical assistance, and lending through financial intermediaries. Adopt an explicit goal of helping all corporate and country clients to do the same. Ensure that all of the above are categorized as “non-aligned” with the Paris Agreement in the emerging joint MDB framework.
• Rapidly scale up investment in renewables and energy efficiency. Each bank should align all lending and operations with a high-probability 1.5°C pathway by 2020. At the project level, renewable investments must ensure the free, prior, and informed consent of impacted communities.
• Increase clean energy access finance by public finance institutions by 2020 to help attain universal energy access by 2030. This finance should prioritize ‘high-impact’ countries, where access rates to electricity and clean cooking remain the lowest, as well as the mainstreaming of off-grid and mini-grid renewable energy into energy portfolios. All MDBs should be looking to build on the example of the African Development Bank which set an ambitious energy strategy for Africa to achieve electricity access by 2025, including a target to deliver 75 million off-grid connections by 2025.
• Devote at least 40% of finance to climate by 2020 and at least 50% by 2025 to assist countries, especially in Africa, in accelerating their chosen low carbon development pathways. This will match targets set by the African Development Bank and the European Bank for Reconstruction and Development. Additionally, MDBs must ensure this finance observes the principle of “do no harm” — to the Paris goals, local communities, or local environments.
• Ensure transparent reporting of direct and indirect energy finance levels and overall portfolio emissions of public finance institutions to allow the public, impacted communities, and civil society to monitor implementation of the strategy.
• Develop, share, and promote policies and programs needed for an equitable pathway to net zero, including through the elimination of fossil fuel subsidies, just transition plans for workers and communities, and the preparation of climate-smart responses to any future global financial crisis.

Beyond shifting billions of dollars in fossil fuel finance towards equitable climate solutions, these commitments from MDBs would send a clear signal to other public finance institutions, the private sector, markets, and governments to follow suit. They would reduce transition risk for MDB client countries and ensure the banks’ portfolios are working towards — not against — a livable and equitable future.

Yours sincerely,

Big Shift Global Coalition

African Coalition for Sustainable Energy and Access

Bank Information Center

Bank Information Center Europe

Both ENDS

Bretton Woods Project

Christian Aid

InspirAction

Oil Change International

SustainUS

Swedish Society for Nature Conservation

Tearfund

350.org

[1] The African Development Bank Group, the Asian Development Bank, the Asian Infrastructure Investment Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank Group, the Islamic Development Bank, the New Development Bank, and the World Bank Group (World Bank, IFC, MIGA).

[2] This refers to infrastructure projects planned in coordination with fossil fuels projects, on which the latter are dependent. Refer to World Bank ESS1 for the Bank’s full definition.