Publications

This year again, expectations for the COP are high regarding developed countries’ commitments towards the funding of action against climate change and its impacts. The question of loss and damage, which pertains to questions of climate justice and of who should pay for the significant impacts of climate change endured by the poorest countries, has just been added to the official COP agenda. And climate finance will again be a hot topic: the pledge made back in 2009 by rich nations to channel US$100bn every year by 2020 to help less wealthy nations mitigate the rise in temperatures and adapt to climate change is still falling short of targets.

Over the past couple of years, the growing net zero commitments across financial institutions strengthened the focus on their portfolios’ greenhouse gas emissions. Yet, this focus does not guarantee emissions are truly reduced in the real economy. For that to happen, there is a pressing need for decarbonisation approaches focused on impact generation, with the appropriate indicators. According to Sarah Bendahou, Public development banks are in a unique position to adopt such approaches and indicators, paving the way for private financial institutions.

This I4CE report focuses on the role of countries’ Long-Term Strategies (LTSs) in the Paris alignment approaches of Development Finance Institutions (DFIs). It explores the possible roles of both the LTS development process and the resulting LTS document in providing insights on the Paris alignment of investments within investment decision-making processes. The findings are relevant for a broader range of financial institutions.

The restructuring of the economy towards a low-carbon system will lead to develop activities that are aligned with the needs of a net zero economy, to restructure others in order to make them compatible with these needs and to stop harmful activities. The financial sector needs to anticipate these dynamics to address strategic risks and […]

COP26 in Glasgow did not disappoint in terms of the volume of announcements from the financial sector. But what is behind the hype? While buried in an avalanche of ‘pretty words’, there was notable progress by financial institutions. They now look at the ‘alignment’ not just of what – but also of who – is financed.

In this study, I4CE reviews the characteristics and areas of intervention of public financial institutions, which make them essential actors for adaptation. The study also reviews all of the Public Financial Institutions' business lines to determine their levers for action.

Expectations ahead of COP 26 in Glasgow regarding the contributions of the finance sector are high. Anuschka Hilke from [i4ce] explains that our expectations, however, may not currently be high enough. An impactful contribution to achieving climate goals will require the financial community to go beyond reducing their exposure to climate-related risks.

This study takes stock on the experience of some twenty countries and several international development institutions in Environmental Budget Tagging. It identifies the expected benefits and the conditions to achieve them : take into account the measures that are unfavorable to the environment, consider the outcomes of assessed measures and not only their intention, repeat the exercise over time and fit it into the existing administrative culture and processes…

As the main financier of the French and European economies, banks play a key role in financing the transition. Their current contribution in France is in the order of 8 billion euros per year, but this will need to more than double according to estimates by I4CE. To accelerate this shift for banking institutions and to prevent their increasing exposures to climate risks, the debate has tended to revolve around whether or not there is a need to reform prudential requirements.

A core goal of the Paris Agreement is “make finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.” Since 2015, financial institutions of all types – from development banks to asset owners and pension funds – have committed to making their portfolios ‘consistent’ with the Paris Agreement. In practice, Financial Institutions are at times approaching alignment from different points of entry: either focusing on one hand “what” or on the other hand “who” is financed.

Today, all eyes are on the forthcoming 2021-2025 Climate Action Plan of the World Bank Group as a proxy for what the development finance community’s ambition for COP26 in Glasgow.The Climate Action Plans of Development Banks up until 2020 have been structured around climate finance commitments focusing on increasing their support for climate-specific activities. However, following up on their commitments to “Align with the Paris Agreement”, these institutions need to develop post 2020 strategies and actions plans, which go a step further to meet the level of ambition of the Paris Agreement objectives.

In 2017, the International Development Finance Club (IDFC) together with the group of Multilateral Development Banks (MDBs) made a joint commitment to “align financial flows with the Paris Agreement”. Since its commitment, the IDFC had focused its efforts on identifying what alignment means and implies.

The government has recently modified the environmental, social and governance disclosure obligations for French investors via the publication of an implementing decree which specifies regulator expectations. Romain Hubert of the Institute for Climate Economics explains why this decree was to be expected and necessary for climate reporting.

In 2015, France pioneered requirements for climate-related disclosure from financial institutions, asking them to explain their strategy for integrating climate-related risks and for contributing to the achievement of the Paris Agreement objectives and the French national low-carbon strategy. Three years of implementation yielded mixed results and requirements are in the course of being updated in […]

Yesterday sees the release of the data on project financing from the nine major Multilateral Development Banks on the Energy Policy Tracker – of which I4CE is partner – and a new Big Shift Global briefing, showing that, since the beginning of the pandemic, the Banks provided at least $12 billion to clean energy and $3 billion for fossil fuels.

Some of the heat waves and wildfires that were experienced in Europe and in the world in the summer of 2019 are symptoms of a climate that is already changing. These events may cause losses for banks and other financial institutions, which will therefore have to integrate climate change into their decisions. Regulators are also pushing in this direction.

While the financial consequences of climate impacts are already materializing, the regulators are implementing their agenda of actions to stimulate financial institutions into analyzing and managing their exposure to “physical climate risks”, and disclosing how they do so as recommended by the TCFD. How can financial actors make quick and efficient progress on analyzing and […]

In this op-ed published in a French economic newspaper, Benoit Leguet, director of I4CE, considers that the French Government must plan over the long term the necessary financing for climate change mitigation and adaptation, by instituting a public finance programming law for climate. France has set itself climate objectives, it must clarify what means it will devote to them.

Climate Action and Sustainable Development are two parts of the same challenge and must be addressed together. Both adopted in 2015, the Paris Agreement and the 2030 Agenda for Sustainable Development frame a set of global objectives that are deeply connected.

Ian Cochran and Alice Pauthier explain why even with COVID19, public financial institutions (PFIs) must continue their important work on aligning their activities with climate and sustainability goals – and how their progress may be key to ensuring that the response to the crisis is both just and green.