MDBs invested $66bn in climate funding in 2020

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Wind turbine against blue sky

Significant rise in funding revealed despite a drop in allocations for lower income countries.

A joint report on multilateral development bank climate funding has revealed a dramatic increase in spending on climate finance in 2020, though allocations for low-and-middle-income nations fell as the world struggled through Covid-19.

Climate finance committed by major multilateral development banks rose to a total of $66bn last year, up from $61.6bn in 2019. Of that funding, 58% or $38bn was committed to low-and-middle-income economies. That was a fall from $41.5bn for those economies in 2019, though that may reflect a short-term shift towards dealing with very immediate pandemic issues.

Along with the $66bn allocated by major MDBs, climate co-finance committed alongside MDB resources amounted to a further $85bn through the year, meaning a total of $151bn was raised.

In the past six years, the MDBs have jointly committed a total of $257bn in climate finance, of which $186bn has been directed to low-and-middle-income economies.

The 2020 financing played a key role in supporting countries to embed green and climate-focused solutions as part of their recoveries from COVID-19. While these programmes affected MDBs’ normal lending operations and caused a dip in climate-specific allocations to low-and-medium-income economies, there is an expectation that the allocations will result in a stronger and more resilient foundation for longer term development.

Of the $66bn climate finance, nearly $50bn was linked to climate change mitigation – reducing harmful greenhouse gas emissions to slow down global warming. The other $16bn went into adaptation finance to help countries mitigate the growing impacts of climate change, which include worsening droughts and more extreme weather events.

Read the Joint Report on MDB Climate Finance 2020 here.