The Good, the Bad and the Urgent: MDB Climate Finance in 2021

In 2021, MDB climate finance to developing countries reached a record $58.9 billion (UNFCCC definition), hitting a collective 2025 target of $50 billion four years early. However, the report highlights significant failures: private sector co-financing rates fell to 25 cents per dollar of public finance, and the share of funding for the most vulnerable countries (SIDS and LDCs) dropped to 19% from 22% in 2020. Additionally, MDBs provided $4.6 billion in fossil fuel financing in 2021, including a $4.5 billion loan for oil and LNG imports from Saudi Arabia to Pakistan. The author urges MDBs to increase adaptation finance, which reached $17.6 billion but remains far below estimated annual costs of $70 billion, and calls for independent verification of self-reported data to improve transparency.

• Climate finance for developing countries reached record levels in 2021, with funding for UNFCCC-defined developing countries increasing by $13.5 billion (30%) to reach $58.9 billion. This means MDBs collectively achieved their 2019 joint statement goal of $50 billion for low- and middle-income countries by 2025 four years ahead of schedule.
• The share of climate finance within overall MDB operations returned to pre-pandemic levels, growing from an average of 31% in 2020 to 41% in 2021, nearly matching the 42% average seen in 2019.
• MDBs are struggling to mobilize private sector investment; in 2021, every dollar of MDB climate finance mobilized only 25 cents in private finance, a decrease from 26 cents in 2020.
• Despite climate goals, MDBs provided $4.6 billion for fossil fuel projects in 2021, an increase of $666 million over 2020. Notable examples include a $4.5 billion syndicated loan by the IsDB Group for crude oil, petroleum products, and LNG from Saudi Arabia to Pakistan, and a World Bank Group guarantee of nearly $1 billion for an LNG plant in Uzbekistan.
• Funding for the most vulnerable nations—Small Island Developing States (SIDS) and Least Developed Countries (LDCs)—declined as a proportion of total climate finance, dropping to 19% in 2021 from 22% in 2020.
• Adaptation finance for low- and middle-income economies rose by $4.3 billion (32%) to $17.6 billion in 2021. While this nearly meets the 2025 collective target of $18 billion, it is insufficient compared to estimated annual adaptation costs of $70 billion in developing countries.
• There is a significant lack of transparency and verification in MDB reporting. Data is self-reported without third-party verification, and Oxfam found that World Bank reported climate finance for 2020 could be inaccurate by as much as $7 billion or 40%.

APA

World Resources Institute (2022). The Good, the Bad and the Urgent: MDB Climate Finance in 2021. https://www.wri.org/insights/good-bad-and-urgent-mdb-climate-finance-2021

Chicago

World Resources Institute. The Good, the Bad and the Urgent: MDB Climate Finance in 2021. 2022. https://www.wri.org/insights/good-bad-and-urgent-mdb-climate-finance-2021.

Wikipedia

{{cite report |author=World Resources Institute |title=The Good, the Bad and the Urgent: MDB Climate Finance in 2021 |date=11 November 2022 |url=https://www.wri.org/insights/good-bad-and-urgent-mdb-climate-finance-2021 |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldresourcesinstitute2022good, author = {{World Resources Institute}}, title = {{The Good, the Bad and the Urgent: MDB Climate Finance in 2021}}, institution = {World Resources Institute}, year = {2022}, month = nov, url = {https://www.wri.org/insights/good-bad-and-urgent-mdb-climate-finance-2021}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }