The Role of Multilateral Development Banks for Low-Carbon Procurement in the Infrastructure Sector

The report analyzes how MDBs can leverage their financial influence to drive low-carbon procurement in infrastructure. While MDBs are increasingly integrating sustainability into policies, they face hurdles such as misalignment with borrowers' socio-economic priorities, limited technical capacity in developing nations, and a lack of market readiness for low-carbon technologies. The authors recommend harmonizing procurement standards across banks, expanding capacity-building for borrowers, and developing systematic monitoring frameworks to track greenhouse gas reductions.

• MDBs possess significant financial leverage in infrastructure, participating in approximately 14% of total infrastructure transactions in low-income developing and emerging economies, with an average contribution of USD 119 million per project.
• MDBs utilize various procurement specifications: conformance-based specifications require adherence to detailed technical requirements like eco-labels, while performance-based specifications focus on outcomes such as reduced greenhouse gas emissions.
• The CO2 Performance Ladder, developed in the Netherlands and used across Europe, serves as both a carbon management system and a green public procurement instrument, rewarding certified suppliers with advantages in public tenders.
• A primary challenge is the misalignment between MDBs' global climate goals and the immediate socio-economic priorities of borrowing countries, such as poverty alleviation, education, and job creation.
• Borrowers in developing countries often lack the institutional and technical capacity to implement low-carbon procurement, specifically regarding life-cycle assessments and the use of eco-labels to evaluate bids.
• Procedural complexity is exacerbated by varying safeguarding rules and procurement standards across different MDBs, which creates administrative burdens for borrowers, especially in co-financed projects.
• Market readiness is a bottleneck, as developing regions often lack the necessary supply chains and affordable access to decarbonization technologies, such as those used in the aluminum sector.
• There is a systemic lack of monitoring and reporting on the actual environmental impacts of MDB-financed procurement; the World Bank is currently the only institution tracking and disclosing progress on sustainable procurement objectives.

APA

Erizaputri, S., & Bechauf, R. (2024). The Role of Multilateral Development Banks for Low-Carbon Procurement in the Infrastructure Sector. International Institute for Sustainable Development. https://www.iisd.org/system/files/2024-12/multilateral-development-banks-low-carbon-procurement.pdf

Chicago

Erizaputri, Sharmila, and Ronja Bechauf. The Role of Multilateral Development Banks for Low-Carbon Procurement in the Infrastructure Sector. International Institute for Sustainable Development, 2024. https://www.iisd.org/system/files/2024-12/multilateral-development-banks-low-carbon-procurement.pdf.

Wikipedia

{{cite report |last1=Erizaputri |first1=Sharmila |last2=Bechauf |first2=Ronja |title=The Role of Multilateral Development Banks for Low-Carbon Procurement in the Infrastructure Sector |publisher=International Institute for Sustainable Development |date=December 2024 |url=https://www.iisd.org/system/files/2024-12/multilateral-development-banks-low-carbon-procurement.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{erizaputri2024role, author = {Erizaputri, Sharmila and Bechauf, Ronja}, title = {{The Role of Multilateral Development Banks for Low-Carbon Procurement in the Infrastructure Sector}}, institution = {International Institute for Sustainable Development}, year = {2024}, month = dec, url = {https://www.iisd.org/system/files/2024-12/multilateral-development-banks-low-carbon-procurement.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }