EMEA at COP28: We Need Trillions Not Billions: the role of MDBs in Climate Finance

At COP28, EMEA organised the side event: "We Need Trillions Not Billions: the role of Multilateral Ddevelopment Banks in Climate Finance" in the Mediterranean Coalition Office.

Moderator: Prof. Rym Ayadi, Euro-Mediterranean Economists Association - EMEA President and Founder
Speakers:
• Alisher Mamadzhanov, Multilateral Governance Manager, Green Climate Fund
• Eleonora Cogo, Senior Associate International Financial Reforms, ECCO think tank
• Alina Saba, Program Officer for Climate Justice at the Center for Economic and Social Rights (CESR).
• Carola Mejía Climate Finance Analyst - Latin American Network for Social and Economic Justice (Latindadd - Red Latinoamericana por Justicia Económica y Social)

Details:
Climate change is one of the most pressing global challenges of our time, with far-reaching economic, social, and environmental implications. To address this crisis, trillions, not billions of finance are required for mitigation and adaptation efforts. Multilateral Development Banks (MDBs) play a pivotal role in climate finance, not only due to the capital they have at their disposal and accessibility to international markets, but also given their position working with governments and the private sector to create the conditions for investment and transformation. They are the most effective institutions to provide low-cost, long maturity financing, to mitigate risks faced by private investors, and to share risks in the most efficient way. However, there are key structural and organizational barriers blocking accelerated efforts.
In their annual report, the principal 10 MDBs announced that in 2022, $60.7 billion of MDB climate finance was provided for low-income and middle-income economies: $38.0 billion, or 63% of this total, was for climate change mitigation finance and $22.7 billion or 37% for climate change adaptation finance. The amount of mobilised private finance stood at $16.9 billion (EIB, October 2023). Despite this, relative to the GDP of borrowing countries, MDB gross disbursements are now just half as large as they were in 1990, and their net resource transfers are unacceptably low (IEG at G20, 2023). Whilst there has been progress, it is far from enough.
Following the annual World Bank and IMF meeting in Marrakesh in October 2023, it is almost unanimous that MDBs must change the way they operate. A cooperative system of MDBs would reduce the fractured policy and “disjointed entities”, streamlining and simplifying MDB processes, and implementing an oversight body could be approaches to accelerate the effective allocation of MDB finance. However, more funds are clearly another issue and mobilizing more private finance is key. Engaging further with the private sector systematically, rather than episodically, and doubling the mobilization compared to their own investments would close this gap, as well as increased co-investment projects to reduce, share and manage risks and thereby bring down the cost of capital. Finally, MDBs should not neglect the SDGs and ensure that they harmoniously fit with their climate agendas.
This panel sessions aims to look at structural changes that could enhance the impact of the MDBs, consider how private finance can be further mobilized, and consider whether more additional oversight would be helpful in reaching climate finance goals. It will consider whether MDBs working as a system could lead the way and serve as major sources of funding and expertise in accelerating the green transition and ensure this opportunity does not escape us.