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The briefing argues that the ADB's financial intermediary (FI) lending, specifically its $95 million equity investment in Clifford Capital, creates a transparency loophole that allows continued support for fossil gas projects. It highlights that while the ADB claims to 'ring-fence' its funds, Clifford Capital continues to finance oil and gas projects globally and in Asia. The document provides case studies of the Tangguh LNG project in Indonesia and the Bhola-2 gas power plant in Bangladesh to illustrate the environmental and social harms resulting from such investments, including mangrove destruction and forced land acquisition. It concludes that the ADB's reliance on outdated 2009 policies for these investments avoids the stricter requirements of the 2025 Environmental and Social Framework.

The report examines the Asian Development Bank's (ADB) 95 million USD equity investment in Clifford Capital, a Singapore-based financial intermediary. It argues that ADB's use of financial intermediaries (FIs) creates a transparency gap that allows continued support for fossil gas projects, contradicting the bank's stated goals of Paris Agreement alignment. The document highlights specific projects in Indonesia and Bangladesh as examples of environmental and social harm resulting from such investments and calls for a phased exit from fossil gas funding.

The report finds limited existing climate cooperation between MDBs and NDBs and highlights a divergence in their progress toward Paris alignment. While MDBs generally have more standardized climate targets and energy policies, NDBs show greater variability and often align their goals with national determined contributions (NDCs). The authors identify operational barriers to on-lending, such as currency risks and institutional capacity gaps, and recommend optimizing operating models, clarifying climate mandates, and sharing expertise to scale global climate investment.

The report argues that the IFC continues to support coal development in Asia by investing in financial intermediaries, most notably the Postal Savings Bank of China. This mechanism allows the IFC to bypass its public commitments to halt coal financing, resulting in indirect support for 68.3 GW of coal-fired power capacity across China, Indonesia, and Cambodia. The document highlights the Jambi 2 project in Indonesia as a primary example of this 'loophole,' detailing the environmental and health impacts of coal mining and power generation on local communities in Jambi province.

The report details the environmental and social impacts of the Obi Island Nickel Industrial Estate, operated by Trimegah Bangun Persada (TBP), and traces the indirect funding from the IFC via banks like OCBC NISP, DBS Bank, and KEB Hana. It highlights severe pollution, biodiversity loss, and the use of captive coal power plants that contradict the IFC's climate commitments.

The report details the environmental and social degradation of Obi Island caused by the nickel industrial park operated by Trimegah Bangun Persada (TBP) and its subsidiaries. It specifically criticizes the IFC for providing funding to financial intermediaries—OCBC NISP, DBS Bank Ltd, and KEB Hana—which in turn finance TBP's operations. The author highlights that these operations rely on captive coal-fired power plants, which the report claims contradicts the IFC's Paris Agreement alignment and its own Performance Standards. Documented impacts include heavy metal contamination of marine biota, drinking water pollution exceeding Indonesian safety standards, high rates of Acute Respiratory Infection in children, and the displacement of local communities.

A coalition of civil society groups, including Oxfam Novib, Both ENDS, SOMO, and Recourse, criticizes FMO's October 2022 Position Statement on Impact and ESG for Financial Intermediaries. The groups argue that FMO's indirect investment model—which constitutes approximately 40% of its total portfolio—carries higher risks than direct lending but lacks sufficient safeguards against human rights abuses and environmental harm. Specifically, they highlight a gap in FMO's fossil fuel phase-out commitments, which apply to direct investments but not to those made via financial intermediaries, such as the Africa Finance Corporation. The statement also notes that a lack of transparency prevents impacted communities from accessing remedies for adverse project impacts.

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.

The document provides a comprehensive set of recommendations for the design and operation of Independent Accountability Mechanisms (IAMs) within financial institutions. It argues that effective IAMs must have a dual mandate of preventing harm and ensuring remedy for affected people and the environment, while fostering institutional learning. The guide details essential structural requirements for independence—such as direct reporting lines to the Board and restrictions on 'revolving door' employment—and outlines best practices for information disclosure, outreach, and the handling of complaints. It specifically analyzes three core functions: Compliance Review, which investigates policy violations to recommend remediation; Dispute Resolution, which facilitates voluntary, party-driven solutions; and Advisory, which uses systemic trends to improve institutional performance. The authors emphasize the need for low barriers to entry for complainants, protection against retaliation, and the requirement for management to implement remedial action plans.

The document argues that development finance institutions (DFIs) cannot achieve full alignment with the Paris Agreement if they only focus on direct project financing, as substantial portions of their finance are channeled through financial intermediaries. It proposes a phased alignment strategy combining subproject-level criteria for mitigation and adaptation with institutional-level requirements for climate governance and transparency.

The paper argues that while DFIs have focused on aligning direct project financing, they must also address 'indirect' investments via financial intermediaries to meet global climate goals. It proposes a four-pillar framework—mitigation, adaptation, governance, and transparency—implemented in two phases over a maximum of five years. The framework suggests sector-specific exclusion lists, physical climate risk screenings, institutional climate governance, and TCFD-aligned reporting. It also recommends a risk-tailored approach to investment instruments, suggesting that general purpose loans and equity be restricted to FIs already meeting alignment criteria, while special purpose vehicles (SPVs) can be used for clients committed to the principle of alignment but lacking immediate capacity.

The briefing examines how the IFC's Green Equity Approach (GEA) fails to prevent continued fossil fuel finance through financial intermediary clients. It highlights cases where GEA clients funded new coal plants and identifies significant IFC equity exposure to oil and gas projects globally. The authors call for a public review of the GEA and a total phase-out of fossil fuel finance in IFC's financial intermediary portfolio.

The report examines the IFC's Green Equity Approach (GEA), which aims to phase out coal investments in financial institutions by 2030. While analysis of 81 high and medium-risk investments between July 2019 and June 2020 shows that 83% explicitly exclude coal, the report identifies significant loopholes. Specifically, it notes that the GEA excludes captive coal plants for industrial use and that debt ring-fencing may be ineffective. A case study of PT Bank KEB Hana Indonesia, the first GEA pilot client, reveals that despite the framework, the bank provided project finance for the Java 9 and 10 coal plants in Indonesia in July 2020.

Forty-seven civil society organisations have urged the Asian Infrastructure Investment Bank (AIIB) to align its operations with the Paris Agreement by ending investments in fossil fuels and prioritizing renewable energy and energy access for poor communities.

The report identifies barriers to climate finance for MSMEs in developing countries—including weak policies, knowledge gaps, and unsuitable financial products—and proposes solutions such as risk-sharing instruments, matchmaking platforms, and the use of financial intermediaries to deliver funds efficiently.

The document argues that the IFC's 'lessons learned' process is insufficient because it ignores institutional culture, fails to address the systemic miscategorisation of project risks, and lacks a formal implementation and monitoring framework. While acknowledging some positive steps, the authors highlight ongoing failures in projects across Honduras, Burma, Indonesia, and Nicaragua, and call for a time-bound plan to integrate human rights assessments and poverty reduction goals into IFC operations.

An open letter from civil society organisations to Dr Jim Yong Kim arguing that the IFC's action plan for financial sector lending fails to address critical gaps in accountability and risk management. The authors highlight that the IFC cannot currently determine if financial intermediary investments cause harm to the environment or local communities, despite these investments accounting for nearly 20 per cent of World Bank Group annual commitments. They call for a fundamental rethink of the IFC's investment strategy, including independent input and participatory consultation with affected communities.

The CAO audit reveals that the IFC "knows very little" about the environmental and social impacts of its financial market lending, which constitutes over 40% of its portfolio. The audit found that the IFC focuses on whether clients have management systems rather than actual outcomes, leading to a situation where approximately 60% of subclients showed non-improved performance. Furthermore, 10% of sampled clients were non-compliant with requirements, and 25% were only partially compliant or uncertain. Despite these findings, the IFC has not committed to changing its practices, suggesting the issue is one of "corporate messaging." Civil society organizations have called for a fundamental overhaul of this lending approach to increase transparency, accountability, and focus on development outcomes.

The document examines how DFI lending through financial intermediaries (FIs) reduces transparency, weakens environmental and social safeguards, and often fails to reach the poorest populations compared to direct investment. It highlights specific cases of land disputes and environmental degradation in India and Brazil, and recommends that DFIs prioritize local ownership, increase public disclosure of sub-projects, and implement stricter due diligence focused on development impact.

The document critiques the World Bank Group's draft palm oil strategy, highlighting systemic failures in protecting indigenous land rights and biodiversity. It specifically warns against a 'loophole' regarding Financial Intermediaries (FIs) and Advisory Services, which the authors claim could be used to bypass environmental and social safeguards. The authors argue that investment should only occur after a strict sequencing of policy and regulatory capacity building, and they call for the continuation of the sector-wide moratorium on palm oil lending until these issues are resolved.