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

The document argues for a shift from simply mobilizing 'climate finance' to ensuring all investments are 'Paris-aligned', meaning they actively support limiting global warming to well below 2°C. It compares MDB eligibility typologies against a framework of 'aligned', 'misaligned', and 'conditional' investments. Analysis of energy and transport sectors shows that while about half of MDB typologies are aligned, two-thirds of the remainder are only conditionally aligned, necessitating stricter benchmarks and fuel-specific criteria to avoid carbon lock-in.

• The Paris Agreement necessitates a shift in financial focus from merely mobilizing additional climate finance for mitigation and adaptation to ensuring all finance flows are consistent with low greenhouse gas emissions and climate-resilient development. This requires redefining mitigation finance from focusing on 'emission reductions' to 'aligning with the Paris Agreement mitigation goal' to avoid short-term reductions that cause long-term lock-in of carbon-intensive technologies.
• The NewClimate Institute categorizes investments into three types: 'Paris-aligned' (actively supporting mitigation goals), 'misaligned' (undermining goals and requiring phase-out), and 'conditional' (alignment depends on specific project characteristics). Conditional investments 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 typologies in the energy supply and transport infrastructure sectors reveals that approximately 50% are 'aligned'. Of the remaining typologies, about two-thirds are 'conditionally aligned', while others cannot be categorized because fuel types are not specified; investments in coal or oil-based installations would be considered misaligned.
• To achieve full alignment with the Paris Agreement temperature goal, MDBs should refine their eligibility criteria by differentiating by fuel type, defining stricter benchmarks such as minimum efficiency levels aligned with 2050 net-zero CO2 emissions, and reporting all other investments for 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} }