MDBs Pledged to Align Financial Flows with the Paris Agreement. They’re Not There Yet

This briefing by the World Resources Institute evaluates the progress of multilateral development banks (MDBs) in aligning their financial flows with the Paris Agreement. It argues that while some progress has been made in direct investments, MDBs are lagging in standardizing fossil fuel exclusions, greenhouse gas accounting, and the alignment of indirect investments and policy-based loans.

• MDBs lack a standardized approach to fossil fuel exclusion, with some institutions continuing to fund emissions-heavy projects. While the European Investment Bank and Inter-American Development Bank have formalized exclusion criteria for coal, oil, and gas, the World Bank Group, Asian Development Bank, Asian Infrastructure Investment Bank, and African Development Bank have not, though the latter two are expected to formally exclude coal in updated policies.
• There is no unified MDB approach to greenhouse gas (GHG) accounting or the application of scope 3 emissions. Only the European Bank for Reconstruction and Development and the World Bank Group have expanded carbon emissions thresholds since 2018, and the African Development Bank has not set emissions targets despite piloting project-level accounting.
• MDB climate finance to UNFCCC-defined developing countries decreased by nearly 5% in 2020 compared to 2019, occurring alongside a likely $20 billion shortfall in the developed countries' commitment to mobilize $100 billion in annual climate finance.
• Indirect investments and policy-based financing remain significant gaps in Paris alignment. Many MDBs channel funds through financial intermediaries without knowing the specific subprojects being financed, and policy-based loans—used heavily during the COVID-19 crisis—have sometimes incentivized new fossil fuel investments, as seen in some World Bank Group projects.
• COVID-19 related debt increases pose a risk to climate action in developing countries, where MDBs are major creditors; for instance, the World Bank Group and other multilateral creditors account for 41% of all African debt service.

APA

World Resources Institute (2021). MDBs Pledged to Align Financial Flows with the Paris Agreement. They’re Not There Yet. https://www.wri.org/technical-perspectives/mdbs-pledged-align-financial-flows-paris-agreement-theyre-not-there-yet

Chicago

World Resources Institute. MDBs Pledged to Align Financial Flows with the Paris Agreement. They’re Not There Yet. 2021. https://www.wri.org/technical-perspectives/mdbs-pledged-align-financial-flows-paris-agreement-theyre-not-there-yet.

Wikipedia

{{cite report |author=World Resources Institute |title=MDBs Pledged to Align Financial Flows with the Paris Agreement. They’re Not There Yet |date=1 November 2021 |url=https://www.wri.org/technical-perspectives/mdbs-pledged-align-financial-flows-paris-agreement-theyre-not-there-yet |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldresourcesinstitute2021mdbs, author = {{World Resources Institute}}, title = {{MDBs Pledged to Align Financial Flows with the Paris Agreement. They’re Not There Yet}}, institution = {World Resources Institute}, year = {2021}, month = nov, url = {https://www.wri.org/technical-perspectives/mdbs-pledged-align-financial-flows-paris-agreement-theyre-not-there-yet}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }