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The document advocates for a shift in how Multilateral Development Banks (MDBs) approach climate action, moving beyond simply maximizing climate finance volumes to ensuring their entire investment portfolios align with the Paris Agreement. It emphasizes the need for MDBs to stop supporting CO2-emitting energy sources, mainstream climate risks for a world 3-4°C warmer, and support the strengthening of Nationally Determined Contributions (NDCs).

The paper examines the role of Multilateral Development Banks (MDBs) in bridging the climate investment gap in developing countries by utilizing de-risking strategies. It argues that MDBs can mobilize private capital by transferring risk at the portfolio level or sharing risk at the project level, specifically by managing political and regulatory risks. The analysis identifies barriers to scaling these efforts, such as insufficient data accessibility regarding credit history and default probabilities in emerging markets. Based on case studies including Room2Run and the Pacific Renewable Energy Program, the paper proposes four strategies for MDBs: expanding financial innovation, treating de-risking as a tool for sector-wide transformation, fostering internal institutional collaboration, and increasing data transparency to facilitate investor decision-making.

A review of World Bank energy sector lending documents from 2000 to 2006 found a lack of systematic integration of climate change issues, specifically regarding GHG emissions, alternative low-emission approaches, incremental costs, and climate-related indicators.

The brief finds that over 80 percent of World Bank energy sector lending in the last five years ignored climate change. It recommends that the World Bank and other multilateral development banks revise strategy guidelines, develop a GHG accounting framework, and initiate sector-level emission reduction pilots.

The report examines open governance in climate finance, finding that while transparency has increased due to UNFCCC requirements, significant gaps remain, particularly in private finance and the decision-making processes of bilateral funders. It argues that transparency, participation, and accountability are mutually reinforcing and that current enforcement mechanisms for international public and private finance are insufficient.

The document evaluates the COVID-19 recovery packages of G20 nations, finding a prevalence of business-as-usual (BAU) investments that risk undermining Paris Agreement goals. It argues that the lack of pre-existing Paris-compatible project planning hindered green recovery efforts and suggests a multifaceted approach using monetary, fiscal, and regulatory levers to align financial flows with climate commitments.

The analysis evaluates four scenarios for reaching the $100 billion climate finance goal by 2020, concluding that a combination of diverse sources and increased public flows is likely necessary. While developed country finance alone is insufficient without extreme growth, the inclusion of Multilateral Development Bank (MDB) finance, private sector leverage, and climate-related Official Development Assistance (ODA) increases the likelihood of meeting the target even under low-growth conditions.

The report argues that for climate finance to be effective and legitimate, there must be a redistribution of power from traditional contributor countries to recipient countries, enhancing national ownership. It suggests a hybrid approach of reforming existing institutions, such as Multilateral Development Banks, while creating new global and national mechanisms to meet the scale of the climate challenge. The authors emphasize the need for strengthened national institutions in developing countries, increased civil society monitoring, and a governance framework based on the three dimensions of power, responsibility, and accountability.

The report reviews MDB loan documentation from 2006–2008, finding that only a small number of projects comprehensively addressed the policy, regulatory, and institutional elements necessary for sustainable energy. It argues that standard energy policies often prioritize short-term costs over long-term environmental benefits and recommends that MDBs more consistently integrate greenhouse gas emission considerations, energy efficiency, and poverty alleviation into their electricity sector support.

The report finds that Multilateral Development Banks (MDBs) have generally failed to systematically integrate climate change issues into energy sector financing, with over 60 percent of such funding over a five-year period ignoring climate change entirely.

The report argues that Multilateral Development Banks (MDBs) must move beyond a narrow focus on market-valued provisioning services to a systematic approach that accounts for multiple ecosystem services in all development operations. It highlights that two-thirds of 24 audited global ecosystem services have been degraded, undermining development. The document proposes integrating ecosystem services into strategic direction setting, advisory services, and investments to better manage risks and opportunities related to climate and environment.