MDBs Hit $125b Climate Funding Record, but Unmet Adaptation Needs Linger
By Faridat Salifu
Multilateral development banks (MDBs) reached an unprecedented milestone in 2023, with climate financing hitting a record $125 billion, according to a joint report released ahead of COP29.
This marks a significant increase from 2019 levels, when MDBs set new targets at the UN Secretary General’s Climate Action Summit.
While the figure signals progress, experts caution that the allocation still falls short of meeting the urgent needs for climate adaptation in vulnerable regions, particularly in low-income countries.
Of the total funding, $74.7 billion was directed to low- and middle-income economies, with a strong focus on climate mitigation. A substantial 67 percent or $50 billion was earmarked for projects aimed at reducing or limiting greenhouse gas emissions, while only $24.7 billion (33 percent) supported climate adaptation efforts.
The African Development Bank, one of the key contributors, stressed the critical need to close the adaptation financing gap, which it estimates to range between $166 billion and $260 billion for Africa alone from 2020 to 2030.
Despite MDBs’ efforts, adaptation finance remains a significant challenge, particularly in regions facing severe climate risks.
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“The Bank has raised its climate finance allocation to 55 percent in 2023, the highest in its history,” said Anthony Nyong, African Development Bank’s Director for Climate Change and Green Growth.
He noted that 53 percent of the Bank’s financing last year went toward climate adaptation, a priority for the institution. “However, the overall global adaptation finance remains insufficient given the scale of the crisis.”
The report, coordinated by the European Investment Bank (EIB), includes data from nine major MDBs, including the World Bank Group and the Asian Development Bank, and tracks progress toward joint climate finance goals set at COP21.
As global leaders prepare for COP29 in Azerbaijan, discussions are expected to focus on setting new climate financing targets and addressing the growing shortfall in adaptation funding.
With 38 percent of the $74.7 billion for low- and middle-income countries mobilised from the private sector, MDBs are pushing for greater private investment in climate initiatives.
Still, as Nyong pointed out, without more robust international financing mechanisms, particularly for adaptation, the world’s most vulnerable regions may struggle to achieve climate resilience.
As the world gears up for COP29 in November 2024, the MDBs’ record figures offer a glimpse of progress, but also a stark reminder of the challenges that remain—especially in closing the adaptation gap and ensuring climate finance reaches the regions most in need.
