The Finance in Common Summit brought together over 420 public development banks (PDBs) including the multilateral development banks (MDBs) as well as regional and national development banks. Given the PDBs’ mandate for environmentally sustainable development, collaboration between these banks should have had the potential to catalyse investments and build momentum towards the achievement of the SDGs and the climate and biodiversity goals.
The summit declaration which sought to build collaboration towards the achievement of these goals lacked concrete, timebound commitments to ending finance to coal and to aligning with the Paris Agreement. Disappointingly, despite the MDBs commitment to align their finance with the Paris Agreement 5 years ago, the Asian Development Bank, Asian Infrastructure Investment Bank, World Bank Group, New Development Bank and InterAmerican Development Bank did not join the official list of signatories at Finance in Common, but only “witnessed” it.
Dr Katherine Kramer, Global Climate Policy Lead at Christian Aid said: “It’s great that this summit has happened, greening financial flows is essential if the Paris Agreement is to be a success. However the outcome of the meeting is disappointing. The communique is full of nice words but without concrete polices and timelines it’s in danger of being just greenwash. It’s good to see a focus on renewables and energy efficiency but there needed to be much tougher language on the funding of fossil fuels. Ultimately they are the cause of this crisis and not addressing the elephant in the room is only going to store up problems down the road.”
Petra Kjell of Recourse said, “Finance in Common provided an ideal opportunity for public development banks to stake out a roadmap for meaningful climate action towards COP26 in 2021. But a lack of ambition and timebound commitments make the summit’s Joint Declaration next to meaningless. It is particularly disappointing that multilateral development banks such as the WB and AIIB, refused to make their engagement official by signing the declaration. The AIIB, is yet again failing to live up to its promises to be ‘green’”
An infographic published this week, showed that despite AIIB’s stated intentions ‘to be ‘green’ and to support the implementation of the Paris Agreement, for every $1 invested in renewable energy, it has invested more than twice that in fossil fuels.’
The Public Bank Climate Tracker Matrix launched by E3G this week shows that despite their commitment to align with the Paris Agreement none of the main MDBs are fully aligned and a number have a long way to go. The EIB is leading the way in many areas and has already ruled out all fossil fuel finance by 2022, with President Hoyer stating during the summit that fossil fuel finance makes no economic sense. But at the other end of the scale, the ADB and AIIB are lagging behind in officially committing to phase out finance to coal in their energy policies.
It should be noted that AfDB and IsDB’s signing of the Finance in Common declaration takes both those banks a step closer to a more formal policy on coal, given the language in the statement on considering “explicit policies to exit from coal financing”.
The UN Secretary General had called for bold action to stop fossil fuel finance at the summit. A joint NGO statement called for public banks to take a collective stand to stop money going towards fossil fuels. Hundreds of Big Shift supporters continue to send emails to the MDBs calling for an update on their joint commitment to Paris alignment, an end to fossil fuel finance and an increase in investments in sustainable, renewable energy access for all.
PDBs have a responsibility to manage public money in a way that ensures a just recovery from the Covid-19 crisis as well as tackling the ongoing climate, social inequality and biodiversity crises. Increasing resilience by shifting finance out of fossil fuels and into sustainable, renewable energy by ensuring renewable energy access for all, including the most vulnerable, is imperative. As Kjell points out “The next 12 months, building up to the next Summit and COP26, will be critical.”
For the MDBs, the upcoming 5th anniversary of the Paris Agreement provides another significant moment this year for them to fulfil their promise to publicly announce in 2020 their joint framework on Paris alignment. It is vital they urgently provide detailed and ambitious plans on this and commit to an end to all fossil fuel finance and an increase in sustainable, renewable energy for all.