General Guidance for Tracking Green Finance

The 'General Guidance for Tracking Green Finance' provides a standardized framework for members of the International Development Finance Club (IDFC) and multilateral development banks (MDBs) to track and report financial flows related to climate mitigation, adaptation, and biodiversity. It establishes 'Common Principles' to ensure consistency, transparency, and accountability, moving away from a one-size-fits-all approach toward granular, project-component-based tracking.

• The IDFC and MDBs utilize a set of 'Common Principles' to standardize green finance tracking, which are categorized into mitigation, adaptation, and biodiversity. These principles are not intended to rate the 'greenness' of projects or assess Paris Agreement alignment, but rather to provide a framework for identifying and quantifying eligible financial flows.
• Effective green finance tracking is governed by three overarching principles: Conservativeness (under-reporting in cases of uncertainty to avoid overestimation), Granularity (tracking at the most detailed project activity or component level), and Complementarity (aligning with UN Sustainable Development Goals).
• Mitigation finance is tracked based on whether activities substantially contribute to reducing GHG emissions or increasing sequestration. Eligible activities are divided into three categories: Negative or very low emissions, Transitional activities, and Enabling activities. Certain activities, such as those supporting fossil fuel infrastructure or leading to deforestation, are explicitly excluded.
• Adaptation finance tracking is context-dependent and follows a three-step qualification process: stating the climate vulnerability context, providing evidence of intent to reduce that vulnerability, and establishing a direct link between activities and the vulnerability. Activities are further categorized into Type 1 (resilience of the project), Type 2 (resilience through the project with joint objectives), and Type 3 (resilience through the project as the primary objective).
• Biodiversity finance tracking focuses on 'net gains' or 'co-benefits,' excluding investments made solely for 'do no significant harm' compliance. Qualification requires a positive and substantive contribution to nature without adversely impacting other objectives. Quantification often uses the Rio Markers rating system, where principal objectives are weighted at 100% and significant objectives at 30%.
• IDFC members face significant challenges in tracking, including the lack of alignment between various regional and sectoral taxonomies (such as the EU Taxonomy and OECD Rio Markers), ambiguities in the Adaptation Common Principles, and resource limitations such as the absence of dedicated tracking departments.
• The guidance recommends that green finance tracking be conducted primarily ex-ante, starting at the project design stage and continuing through appraisal and board approval, with ex-post monitoring and evaluation used to assess actual expenditures and effectiveness.

APA

Stout, S., Alberti, C., Miao, G., Abraham, S., Strinati, C., Padmanabhi, R., & Petsinaris, F. (2024). General Guidance for Tracking Green Finance. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/11/IDFC-General-Guidance-for-Tracking-Green-Finance.pdf

Chicago

Stout, Sean, Caroline Alberti, Gaoyi Miao, Sasha Abraham, Costanza Strinati, Rajashree Padmanabhi, and Foivos Petsinaris. General Guidance for Tracking Green Finance. Climate Policy Initiative, 2024. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/11/IDFC-General-Guidance-for-Tracking-Green-Finance.pdf.

Wikipedia

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BibTeX

@techreport{stout2024general, author = {Stout, Sean and Alberti, Caroline and Miao, Gaoyi and Abraham, Sasha and Strinati, Costanza and Padmanabhi, Rajashree and Petsinaris, Foivos}, title = {{General Guidance for Tracking Green Finance}}, institution = {Climate Policy Initiative}, year = {2024}, month = oct, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2024/11/IDFC-General-Guidance-for-Tracking-Green-Finance.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }