Public financial institutions – whether domestic development banks or international development finance institutions (DFIs) – are in a position to be key actors in aligning development and the low-carbon transition challenge.
These institutions channel financial resources and often provide capacity support to recipients to support the achievement of international and national development mandates and objectives. In practice DFIs can contribute to climate action in developing countries by taking on three main responsibilities: i) facilitate access to capital, ii) assist in the development of national development strategies coherent with a low-carbon and resilient transition, and iii) work with national banking and financial industries to foster their involvement and leverage additional financing. Over the last decade, DFIs have taken significant steps to mainstream climate change which offer examples and lessons for all financial institutions.
Taken to its fullest extent, mainstreaming of climate change or the transition to a LCCR development model implies both formal and informal integration into all activities of a given DFI. Thus, climate change becomes a ‘prism’ through which all finance activities – as well as development plans, country and regional strategies, and institutional policies – is understood and analyzed.
A short Spanish version of this report was published by ALIDE.