ADB

Overview of climate mainstreaming approach and goals:

The Asia and Pacific region is at extreme risk of undoing its economic and social development gains due to unchecked disasters and unabated climate change. As Asia and the Pacific’s Climate Bank, ADB is committed to supporting its developing member countries (DMCs) in tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability – a key operational priority under Strategy 2030.  ADB’s Strategy 2030 is anchored on the vision of achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific. Its third operational priority outlines key responses on (i) scaling up support to address climate change, disaster risks, and environmental degradation; (ii) accelerating low GHG emission development; (iii) ensuring a comprehensive approach to build climate and disaster resilience; (iv) ensuring environmental sustainability; and (v) increasing focus on the water–food–energy nexus. It also commits ADB’s climate operations target: 75% of the number of ADB’s committed operations (on a 3-year rolling average, including both sovereign and nonsovereign operations) will be supporting climate change mitigation and adaptation by 2030.

Recognizing the need for scaled up finance to transform economies towards low carbon and climate resilient development[1], ADB raised its ambition to deliver $100 billion of cumulative climate finance from 2019–2030, of which $34 billion is for climate adaptation and resilience,[2] and private sector operations expected to contribute $12 billion, with an expected crowding in of an additional $18 billion to $30 billion.[3] ADB has also committed to the alignment of its sovereign and nonsovereign operations with the goals of the Paris Agreement with new sovereign operations 100% aligned by 1 July 2023, and new nonsovereign operations 85% aligned by 1 July 2023 and 100% by 1 July 2025.

ADB has operationalized its new operating model (NOM) to accelerate its transformation and more effectively serve the rapidly changing needs of its DMCs and enable ADB to increase its capacity as Asia and the Pacific’s Climate Bank.[4] The NOM strengthens synergies between sovereign and nonsovereign operations and harnesses sectoral and thematic expertise towards swifter and enhanced delivery of climate products and knowledge services. A forthcoming Climate Change Action Plan will put into practice ADB’s vision as a trusted partner in enabling and stimulating climate-smart investment in the region, and its pursuit of its climate finance ambitions.

• [1] ADB. 2021. ADB Raises 2019–2030 Climate Finance Ambition to $100 Billion. News Release. 13 October. https://www.adb.org/news/adb-raises-2019-2030-climate-finance-ambition-100-billion.
• [2] Ibid
• [3] Ibid
• [4] ADB. 2022. ADB Adopts New Operating Model to Meet Rapidly Changing Needs of Asia and the Pacific. News Release. 31 October. https://www.adb.org/news/adb-adopts-new-operating-model-meet-rapidly-changing-needs-asia-and-pacific,

Principal Strategic Documents

• • Climate Change Operational Framework 2017–2030: Enhanced Actions for Low Greenhouse Gas Emissions and Climate-Resilient Development: The Climate Change Operational Framework 2017–2030 framework provides direction for enhancing resilience and supporting climate adaptation and mitigation actions in ADB operations and business processes.
  • Strategy 2030: Achieving a Prosperous, Inclusive, Resilient, and Sustainable Asia and the Pacific:
  • Energy Policy Supporting Low-Carbon Transition in Asia and the Pacific : This policy guides ADB’s energy sector operations to support energy access improvement and low-carbon transition in Asia and the Pacific.
  • Monitoring and Evaluation of ADB’s Climate Change Operational Framework (CCOF2030) 2017–2030 (SDWP 81) : This paper reviews the CCOF2030 results framework and examines its primary components pertaining to good monitoring and evaluation. Drawing lessons from the pilot monitoring of the CCOF2030 results framework and the database, this paper also aims to help inform future approach to framework design and implementation. Further, it examines similarities or potential overlaps between the CCOF2030 and Strategy 2030 Operational Priority 3, which tackles the intersecting themes of climate change, climate and disaster resilience, and environmental sustainability.

Principal Tools and Methodologies

• ADB Tools and Methodologies:
  • Climate Change Financing at ADB: The site contains a dashboard showing data on climate financing from 2017 onwards coming from ADB administered donor trust funds. Financing from multilateral climate funds such as Global Environment Facility, Climate Investment Fund, Green Climate Fund, and bilateral financing, among other are detailed. Data is disaggregated by: mitigation finance/adaptation finance, sector, region, instrument, recipient, and source. A link to downloadable datasets is also presented in the site.
  • Climate Risk Management in ADB Projects: ADB’s climate risk management approach aims to reduce risks resulting from climate change to investment projects in Asia and the Pacific. ADB’s framework identifies climate change risks to project performance in the early stages of project development and incorporates adaptation measures in the design of projects at risk.
  • Principles of Climate Risk Management for Climate Proofing Projects: This document identifies opportunities to update the Asian Development Bank (ADB) climate risk management (CRM) process and climate risk and adaptation assessments (CRAs). The intent is to streamline the CRM framework with a fit-for-purpose approach, and to improve the quality and consistency of CRAs. To this end, a set of guiding principles aligned with the three main phases of the ADB project cycle—conceptualization, preparation, and implementation—is presented here. The principles highlight the value of a more strategic method for upstream activities, as well as the benefits of a differentiated approach, in view of the varying CRA needs of projects. Specific principles are proposed for improving the main CRA steps, with a focus on project understanding and decision-led risk assessment, and on the prioritization of adaptation options. Finally, the paper emphasizes the need to strengthen downstream activities, to ensure that good practice flows into implementation. The paper provides useful lessons and insights into climate risk management for ADB and its developing member countries, as well as information relevant to climate risk assessments of investments.
  • Guidelines for the Economic Analysis of Projects (March 2017): Guidelines for ADB staff, consultants, and officials of developing member countries in assessing project proposals for economic viability and financial sustainability. Also provide guidance on the use of social cost of carbon, i.e. in valuing GHG emissions, it is important to use a standard value, also called global social cost of carbon, across all projects. A review of the empirical estimates of the global social cost of carbon reported by the Intergovernmental Panel on Climate Change suggests a unit value of $36.30 per ton of CO2 or its equivalent in 2016 prices for 2016 emissions, to be increased by 2% annually in real terms to allow for the potential of increasing marginal damage of global warming over time. This unit value can be used to estimate the benefit in damage avoided for projects that reduce emissions and the cost in damage created for projects that increase emissions. The unit value may be revised in the future as more and new estimates of global warming damage become available. (para 163)
• Dashboards and datasets
  • Key Indicators Database: The Common Principles for Climate Mitigation Finance Tracking consist of a set of definitions and guidelines and a list of eligible activities that allow for consistent accounting and reporting of financial flows for climate change mitigation finance
• Joint MDB Tools and Methodologies
  • Common Principles for Climate Mitigation Finance Tracking : The Common Principles for Climate Mitigation Finance Tracking consist of a set of definitions and guidelines and a list of eligible activities that allow for consistent accounting and reporting of financial flows for climate change mitigation finance.
  • Joint Multilateral Development Banks’ Methodology for Tracking Climate Mitigation Finance in the 2021 Joint Report on Multilateral Development Banks’ Climate Finance :  A new version of the common principles, including the list of eligible activities, taking particularly the following two aspects into account: (i) consideration of new mitigation activities that are required in order to achieve the structural changes in the economy pointed out by the IPCC as necessary to achieve the goals of the Paris Agreement and (ii) identification of activities that, despite reducing GHG emissions in the short term, risk a long-term lock-in of emissive technologies, thereby undermining the long-term temperature goal of the Paris Agreement, such activities cannot be considered as climate mitigation finance
  • Joint Multilateral Development Banks’ Methodology for Tracking Climate Change Adaptation Finance : The joint MDB methodology seeks to identify the links between adaptation activities and the project’s explicit intent to reduce vulnerability to climate change and takes a context-specific, granular and conservative approach to reduce scope for over-reporting of adaptation finance and seeks to identify the links between adaptation activities and the project’s explicit intent to reduce vulnerability to climate change. It is an update to the Common Principles for Climate Change Adaptation Finance Tracking adopted in 2015.
  • A Framework and Principles for Climate Resilience Metrics:  This paper sets out principles, including core concepts and other characteristics of climate resilience metrics, together with a high-level framework for such metrics in financing operations, focusing mainly on MDB and IDFC operations but with wider applicability to other types of financial institutions.
  • The MDBs’ alignment approach to the objectives of the Paris Agreement : The MDBs’ approach is based on six building blocks that have been identified as the core areas for alignment with the objectives of the Paris Agreement. A joint MDB working group is developing methods and tools to operationalize this effort under each of the building blocks:
    • 1) Alignment with mitigation goals ;
    • 2) Adaptation and climate-resilient operations ;
    • 3) Accelerated contribution to the transition through climate finance ;
    • 4) Engagement and policy development support ;
    • 5) Reporting ; and,
    • 6) Align internal activities.
  • Joint MDB Methodological Principles for Assessment of Paris Agreement Alignment of New Operations— Direct Investment Lending Operations: This document provides methodological principles for assessing the alignment of operations with the mitigation goals (BB1) and adaptation and climate resilience goals (BB2) of the Paris Agreement
  • Joint MDB Methodological Principles for Assessment of Paris Agreement Alignment of New Operations — Intermediated Financing: This document builds on the core principles of ‘Direct Investment Lending Operations’ to develop an approach for determining alignment of MDB financial flows via financial intermediaries and provides two options to assess the PA of intermediated finance: (1) Transaction-based alignment, (2) Counterparty-based alignment
  • Joint MDB Methodological Principles for Assessment of Paris Agreement Alignment of New Operations — General Corporate Purpose Financing: This document provides methodological principles for assessing the alignment of operations with mitigation goals (BB1) and adaptation and climate resilient operations (BB2) of the Paris Agreement, by taking into account the core principles of ‘Direct Investment Lending Operations’ and adopts the concept into private real sector investment operations without targeted use of proceeds.
  • Joint MDB Methodological Principles for Assessment of Paris Agreement Alignment of New Operations — Policy-Based Lending Operations: This document provides methodological principles for assessing the alignment of operations with the mitigation (BB1) and adaptation and climate resilient (BB2) goals of the Paris Agreement and takes into account the core principles of Direct Investment Lending Operations’ and extends the concept to operations where financial flows support national and sub-national programs of policy reforms and institutional actions that promote growth, poverty reduction and sustainable development through Policy-based lending operations (PBLs).
  • Joint MDB Methodological Principles for Assessment of Paris Agreement Alignment of New Operations – List of Activities Considered Universally Aligned with the Paris Agreement’s Mitigation Goals or Not Aligned with the Mitigation Goals: This document presents the lists of activity types that are currently considered to always be consistent or inconsistent with low-greenhouse gas (GHG) development pathways

Key Reports and Other Materials

• ADB Key Reports:
  • ADB Sustainability Reports: The Sustainability Report of the Asian Development Bank (ADB) provides, in a readily available format, information about the Bank’s continued work on promoting environmentally sustainable and inclusive growth, and on reducing its corporate footprint. The report responds to and presents information in accordance with the Global Reporting Initiative’s reporting guidelines.
  • Climate-Related Financial Disclosures 2021: Progress Report on Implementing the Recommendations of the Task Force on Climate-Related Financial Disclosures: This report provides an overview of the ADB’s progress in implementing the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) established by the G20’s Financial Stability Board.
  • Asia in the Global Transition to Net Zero: Asian Development Outlook 2023 Thematic Report: This report models emission pathways based on commitments and pledges under the Paris Agreement and compares them with more optimal routes to net zero. It examines required transformations in the energy sector and land use and assesses socioeconomic implications. The report looks at policy costs, climate benefits, air quality co-benefits, and labor market outcomes, and discusses policies for an efficient and equitable transition.
  • Accelerating Private Sector Engagement in Adaptation in Asia and the Pacific:  This working paper outlines how to scale up the private sector’s involvement in climate adaptation and harness its financial clout, technical know-how, and ingenuity to help build climate resilient economies in the Asia and Pacific region.
  • Multilateral Development Bank Support for Disaster-Resilient Infrastructure Systems: This publication explores how multilateral development banks (MDBs) can help improve the resilience of infrastructure given increasing climate and disaster risks.
  • Just Transition Beyond the Energy Sector: This brief advocates that Just Transition be considered to minimize the potential negative impacts of climate action in key non-energy economic sectors in Asia and the Pacific.
  • Climate Risk Country Profiles:  These publications comprehensively synthesize climate characteristics and projections, vulnerability to natural hazards, sectoral climate change impacts, and adaptation priorities.
• Joint MDB Key Report
  • 2021 Joint Report on MDB’s Climate Finance: This 11th edition of the Joint Report on Multilateral Development Banks’ Climate Finance is an overview of climate finance committed in 2021 by the African Development Bank (AfDB), the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Inter-American Development Bank Group (IDBG), the Islamic Development Bank (IsDB) and the World Bank Group (WBG). This year’s report also summarises information on climate finance tracking from the New Development Bank (NDB) and the Council of Europe Development Bank (CEB), presented separately from the joint figures.5 NDB and CEB climate finance commitments are not yet included in the total MDB climate finance reported in this year’s edition.

For a comprehensive list of publications from the ADB please consult the following document: Asian Development Bank – supplementary documentation PDF