ENHANCING MDB–NDB COOPERATION

The report finds that climate-related financial cooperation between MDBs and NDBs is currently limited, with approximately USD 7 billion in tracked flows from 2015 to 2022. There is significant divergence in how these institutions approach Paris alignment, with MDBs generally possessing more standardised targets and dedicated energy policies, while NDBs often anchor their goals in national NDCs. Key barriers to increased cooperation include currency risks, differing institutional mandates, and gaps in technical capacity. The authors recommend that MDBs optimise on-lending models, promote local currency instruments, and share expertise through platforms like Finance in Common to scale up climate investment.

• Climate-related financial flows from MDBs to NDBs in emerging and developing economies (EMDEs) between 2015 and 2022 totaled approximately USD 7 billion, based on a sample of 55 transactions.
• The majority of MDB-to-NDB climate finance does not have a specific sectoral focus, often supporting general green investment or disaster recovery; however, energy systems is the largest specific sectoral recipient, receiving USD 2,301 million.
• MDBs show higher cohesion in climate finance tracking and target setting than NDBs, with all six sampled MDBs having established targets or thresholds for climate finance.
• MDBs typically extend their environmental and social safeguard (ESS) policies to cover financial intermediaries, whereas NDBs exhibit greater variability in the detail and availability of such policies.
• Dedicated climate change strategies are more prevalent among MDBs; five of the six sampled MDBs have published such strategies, while NDBs more frequently integrate climate goals into broader strategic documents linked to national NDCs.
• MDBs generally apply climate risk screening across all operations, while NDBs lack consistent public detail on such processes, though some, like PT SMI and DBSA, have implemented ESS management systems.
• MDBs are more likely to have formal energy sector policies and fossil fuel exclusion policies (particularly for coal) compared to NDBs, who are more sensitive to changing national policy priorities.
• Operational barriers to MDB-NDB cooperation include currency risks, where hard currency loans are not always competitive due to depreciation and high hedging costs, and a lack of bankable project pipelines at the NDB level.
• Structural factors influencing both Paris alignment and finance flows include the single-shareholder governance of NDBs, which makes them dependent on national political priorities, and the multi-shareholder structure of MDBs, which can create geopolitical decision-making bottlenecks.

APA

AHLGREN, V., SABOGAL, L., CHIN, N., BAGNERA, E., & PINKO, N. (2023). ENHANCING MDB–NDB COOPERATION. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2023/12/CPI-E3G-Report-Enhancing-MDBNDB-cooperation-3.pdf

Chicago

AHLGREN, VIKTOR, LAURA SABOGAL, NEIL CHIN, ELENA BAGNERA, and NICOLE PINKO. ENHANCING MDB–NDB COOPERATION. Climate Policy Initiative, 2023. https://www.climatepolicyinitiative.org/wp-content/uploads/2023/12/CPI-E3G-Report-Enhancing-MDBNDB-cooperation-3.pdf.

Wikipedia

{{cite report |last1=AHLGREN |first1=VIKTOR |last2=SABOGAL |first2=LAURA |last3=CHIN |first3=NEIL |last4=BAGNERA |first4=ELENA |last5=PINKO |first5=NICOLE |title=ENHANCING MDB–NDB COOPERATION |publisher=Climate Policy Initiative |date=December 2023 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2023/12/CPI-E3G-Report-Enhancing-MDBNDB-cooperation-3.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ahlgren2023enhancing, author = {AHLGREN, VIKTOR and SABOGAL, LAURA and CHIN, NEIL and BAGNERA, ELENA and PINKO, NICOLE}, title = {{ENHANCING MDB–NDB COOPERATION}}, institution = {Climate Policy Initiative}, year = {2023}, month = dec, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2023/12/CPI-E3G-Report-Enhancing-MDBNDB-cooperation-3.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }