Paris Alignment Principles

The report argues that current IFI efforts to align indirect financing through financial intermediaries with the Paris Agreement are insufficient and opaque. It highlights how this lending model allows IFIs to 'outsource' environmental and social safeguards, potentially funding fossil fuel projects. The authors provide recommendations for a rights-based alignment methodology that includes an absolute ban on new fossil fuel financing, increased support for sustainable renewables, and strict transparency requirements for sub-project disclosure.

• Financial intermediary (FI) investments represent a substantial and increasing portion of IFI portfolios, but they create a transparency gap because IFIs often delegate the responsibility for assessing and approving sub-projects to the intermediaries.
• Current MDB frameworks for Paris alignment are criticized for being too slow, excluding existing portfolios, and relying on Nationally Determined Contributions (NDCs) that are collectively insufficient to limit warming to 1.5°C.
• The International Finance Corporation (IFC) has faced failures in ensuring its FI clients adhere to environmental and social standards, exemplified by the financing of coal power plants in the Philippines through Rizal Commercial Banking Corporation (RCBC).
• The Asian Development Bank (ADB) has significant FI exposure to coal through investments in Indian banks Axis Bank and Yes Bank, and the private equity fund Clifford Capital, which has investments in oil and gas.
• The Asian Infrastructure Investment Bank (AIIB) has used ad hoc restrictions in some FI contracts to exclude coal and high-risk projects, but these are not yet codified in its general strategies or policies.
• The report recommends that IFIs adopt a strict policy to stop financing all new coal, oil, and gas projects, arguing that fossil gas is not a viable 'transition fuel' due to methane emissions and long-term infrastructure lock-in.
• To ensure genuine alignment, the report argues that IFIs must implement a rights-based approach that prioritizes human rights, gender equality, and the protection of marginalized communities.

APA

Pascual, M. M., & Geary, K. (2022). Paris Alignment Principles. Trend Asia. https://trendasia.org/wp-content/uploads/2022/10/Paris-Alignment-Principles-What-IFIs-need-to-do-to-align-their-financial-intermediary-investments-with-Paris-and-tackle-climate-change.pdf

Chicago

Pascual, Mark Moreno, and Kate Geary. Paris Alignment Principles. Trend Asia, 2022. https://trendasia.org/wp-content/uploads/2022/10/Paris-Alignment-Principles-What-IFIs-need-to-do-to-align-their-financial-intermediary-investments-with-Paris-and-tackle-climate-change.pdf.

Wikipedia

{{cite report |last1=Pascual |first1=Mark Moreno |last2=Geary |first2=Kate |title=Paris Alignment Principles |publisher=Trend Asia |date=October 2022 |url=https://trendasia.org/wp-content/uploads/2022/10/Paris-Alignment-Principles-What-IFIs-need-to-do-to-align-their-financial-intermediary-investments-with-Paris-and-tackle-climate-change.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{pascual2022paris, author = {Pascual, Mark Moreno and Geary, Kate}, title = {{Paris Alignment Principles}}, institution = {Trend Asia}, year = {2022}, month = oct, url = {https://trendasia.org/wp-content/uploads/2022/10/Paris-Alignment-Principles-What-IFIs-need-to-do-to-align-their-financial-intermediary-investments-with-Paris-and-tackle-climate-change.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }