Moving beyond climate finance towards Paris-aligned investing: How do MDBs' climate finance

This briefing by the NewClimate Institute examines the transition from traditional climate finance, focused on mobilizing funds for mitigation and adaptation, toward 'Paris-aligned investing'. It evaluates the eligibility criteria used by Multilateral Development Banks (MDBs) against a framework that categorizes investments as 'Paris-aligned', 'misaligned', or 'conditional'.

• The Paris Agreement shifts the financial requirement from simply mobilizing climate finance for emission reductions to ensuring all finance flows are consistent with a pathway toward low greenhouse gas emissions and climate-resilient development. This means investments must be compatible with the goal of limiting global warming to well below 2°C and pursuing 1.5°C, avoiding 'lock-in' of carbon-intensive technologies that might reduce emissions in the short term but create stranded assets.
• The NewClimate Institute uses a three-part categorization for investments: 'Paris-aligned' (actively supporting mitigation goals long-term), 'misaligned' (undermining goals and requiring quick phase-out), and 'conditional' (dependent on specific project characteristics). Conditional investments, such as electricity grids or efficiency improvements, must align with a cost-efficient transformation to net-zero emissions in the second half of the century and ensure energy-related emissions cease approximately by the century mid-point.
• An analysis of MDB eligibility criteria in the energy supply and transport infrastructure sectors reveals that approximately 50% of the typologies are 'aligned'. Of the remaining items, about two-thirds are 'conditionally aligned'. Some items cannot be categorized because fuel types are not specified; investments in coal or oil-based installations would be considered misaligned, while gas-based installations would require further consideration.
• To better align with the Paris Agreement, MDBs are encouraged to refine their eligibility criteria by differentiating by fuel type, establishing strict benchmarks (such as minimum efficiency levels) consistent with net-zero CO2 emissions around 2050, and reporting all other investments to ensure transparency.

APA

Fekete, H., Röser, F., Nascimento, L., Kachi, A., Bartosch, S., & Weischer, L. (2018). Moving beyond climate finance towards Paris-aligned investing: How do MDBs' climate finance. NewClimate Institute. https://newclimate.org/news/moving-beyond-climate-finance-towards-paris-aligned-investing-how-do-mdbs-climate-finance

Chicago

Fekete, Hanna, Frauke Röser, Leonardo Nascimento, Aki Kachi, Sophie Bartosch, and Lutz Weischer. Moving beyond climate finance towards Paris-aligned investing: How do MDBs' climate finance. NewClimate Institute, 2018. https://newclimate.org/news/moving-beyond-climate-finance-towards-paris-aligned-investing-how-do-mdbs-climate-finance.

Wikipedia

{{cite report |last1=Fekete |first1=Hanna |last2=Röser |first2=Frauke |last3=Nascimento |first3=Leonardo |last4=Kachi |first4=Aki |last5=Bartosch |first5=Sophie |last6=Weischer |first6=Lutz |title=Moving beyond climate finance towards Paris-aligned investing: How do MDBs' climate finance |publisher=NewClimate Institute |date=7 December 2018 |url=https://newclimate.org/news/moving-beyond-climate-finance-towards-paris-aligned-investing-how-do-mdbs-climate-finance |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{fekete2018moving, author = {Fekete, Hanna and Röser, Frauke and Nascimento, Leonardo and Kachi, Aki and Bartosch, Sophie and Weischer, Lutz}, title = {{Moving beyond climate finance towards Paris-aligned investing: How do MDBs' climate finance}}, institution = {NewClimate Institute}, year = {2018}, month = dec, url = {https://newclimate.org/news/moving-beyond-climate-finance-towards-paris-aligned-investing-how-do-mdbs-climate-finance}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }