Enhancing MDB-NDB Cooperation: Understanding Climate Finance Flows and Paris Alignment

This report by the Climate Policy Initiative (CPI) and E3G analyzes climate finance flows and Paris Agreement alignment between multilateral development banks (MDBs) and national development banks (NDBs) in emerging and developing economies (EMDEs). It identifies limited current cooperation, operational frictions in on-lending, and divergent approaches to climate strategies, providing recommendations to scale collaboration through improved governance, clarified mandates, and shared institutional capacity.

• Analysis of climate-related financial flows from MDBs to NDBs in emerging and developing economies between 2015 and 2022 indicates limited cooperation, with only 52 direct transactions totaling USD 7 billion identified through MDB joint reporting project portals.
• Operational challenges hinder increased on-lending, specifically where misalignment between MDBs and NDBs causes transactional friction. These challenges include expertise, institutional capacity, general risk appetite, domestic currency lending, and currency risks, as well as governance and macroeconomic political economy risks.
• MDBs and NDBs differ in their progress toward Paris alignment. A sample of six MDBs and six NDBs showed that NDBs exhibit more variability in setting climate finance targets and accounting, and are less likely to have dedicated adaptation goals or climate change strategies. NDBs typically integrate climate goals into core strategic documents via NDCs and generally lack dedicated energy sector policies, though some participate in just transition efforts.

APA

Climate Policy Initiative (2023). Enhancing MDB-NDB Cooperation: Understanding Climate Finance Flows and Paris Alignment. https://www.climatepolicyinitiative.org/publication/enhancing-mdb-ndb-cooperation-understanding-climate-finance-flows-and-paris-alignment/

Chicago

Climate Policy Initiative. Enhancing MDB-NDB Cooperation: Understanding Climate Finance Flows and Paris Alignment. 2023. https://www.climatepolicyinitiative.org/publication/enhancing-mdb-ndb-cooperation-understanding-climate-finance-flows-and-paris-alignment/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Enhancing MDB-NDB Cooperation: Understanding Climate Finance Flows and Paris Alignment |date=4 December 2023 |url=https://www.climatepolicyinitiative.org/publication/enhancing-mdb-ndb-cooperation-understanding-climate-finance-flows-and-paris-alignment/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2023enhancing, author = {{Climate Policy Initiative}}, title = {{Enhancing MDB-NDB Cooperation: Understanding Climate Finance Flows and Paris Alignment}}, institution = {Climate Policy Initiative}, year = {2023}, month = dec, url = {https://www.climatepolicyinitiative.org/publication/enhancing-mdb-ndb-cooperation-understanding-climate-finance-flows-and-paris-alignment/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }