The Role of International finance institutions

This briefing by the Climate Policy Initiative synthesizes survey results from 15 Development Finance Institutions (DFIs) and Development Banks (DBs) from developed countries to evaluate their role in scaling up green and climate investments. It analyzes 2012 financial commitments, identifies barriers to scaling investment, and examines the institutions' approach to fossil fuel financing and risk management.

• In 2012, the 15 surveyed DFIs and DBs committed approximately USD 18.2 billion to green and climate finance. The majority of these funds (64%) were allocated to mitigation interventions, with the largest sectoral shares going to sustainable transport (33%), renewable energy (28%), and energy efficiency (17%). Within renewable energy, solar energy received about USD 1 billion, representing 30% of those commitments.
• The distribution of green and climate finance in 2012 was heavily skewed toward the public sector, which received 69% (USD 12.5 billion) of the funds. Private sector actors received 19% (USD 3.5 billion), and 12% (USD 2.2 billion) was channeled indirectly through organizations such as local financial institutions. Geographically, South Asian countries were the largest recipients, receiving approximately 30% of the total (USD 5.4 billion).
• Loans were the primary financial instrument used, totaling USD 15.1 billion in 2012, with 83% of these loans supporting mitigation. Grants accounted for 10% of the total, and equity represented 3%.
• The ability of DFIs and DBs to scale up green investments is primarily hindered by a shortage of financially viable and bankable projects, cited by 37% of respondents. Other significant constraints include limited availability of equity or dedicated financial resources (19%), a shortage of skilled human resources (15%), and inadequate enabling policy frameworks in recipient countries (7%).
• DFIs and DBs continue to finance fossil fuel projects, though 9 of the surveyed institutions have strategies or criteria to limit such investments. Twelve respondents reported that new commitments to fossil fuel projects over the last five years ranged between less than 1% and 10% of their total annual new commitments.
• While DFIs and DBs are well-positioned to handle country, operational, and technology risks, they often avoid risks associated with currency, start-up businesses, and prototype technologies. To manage these, some institutions use structured instruments, special vehicles, grant elements for 'first losses', and various government loan guarantees.
• There is a lack of consistent data across the surveyed institutions regarding the carbon intensity of their portfolios, the amount of fossil-fuel related funding, and the specific role of intermediaries in channeling funds to private entities. Methodologies for quantifying leveraged third-party private investment are described as being in their infancy.

APA

Climate Policy Initiative (n.d.). The Role of International finance institutions. https://www.climatepolicyinitiative.org/wp-content/uploads/2014/04/CPI-Brief-for-DFI-DB-meeting.pdf

Chicago

Climate Policy Initiative. The Role of International finance institutions. n.d. https://www.climatepolicyinitiative.org/wp-content/uploads/2014/04/CPI-Brief-for-DFI-DB-meeting.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=The Role of International finance institutions |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2014/04/CPI-Brief-for-DFI-DB-meeting.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiativendrole, author = {{Climate Policy Initiative}}, title = {{The Role of International finance institutions}}, institution = {Climate Policy Initiative}, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2014/04/CPI-Brief-for-DFI-DB-meeting.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }