I4CE launches its publication series on Mainstreaming Low-Carbon Climate-Resilient growth pathways into Development Finance Institutions’ activities

Development finance institutions (DFIs) are in a position to be key actors in aligning development and the 2° challenge. One of the principal challenges today is to scale-up the financial flows to the trillions of dollars per year necessary to achieve the 2°C long-term objectives. Achieving this transition to a low-carbon, climate resilient (LCCR) economic model requires the integration or ‘mainstreaming’ of climate issues as a prism through which all investment decisions should be made.

To understand how DFIs are currently addressing this challenge, I4CE is conducting a long-term research project with financial support for the first phase from Caisse des Dépots and Agence Française de Développement. The integration or ‘mainstreaming’ of climate change into development finance decisions poses a broad number of operational challenges. Drawing from the current practice of Development Finance Institutions (DFIs), this project looks at the approaches, tools and metrics used by DFIs to integrate both mitigation and adaptation objectives into investment decision making.

Through targeted in depth case studies and an extensive review of public reports, the project aims to facilitate learning between DFIs through profiles of current practice. Second, the project identifies in practice the paradigm shift needed to integrate climate and development objectives to establish a ‘LCCR development model’ able to simultaneously tackling development priorities and needs for resilient, low-carbon growth. This will necessitate a move from focusing on a ‘siloed’ vision of climate finance to a means of aligning activities across the economy with the LCCR objectives to ensure that the majority of investments are coherent with this long-term transition

Working with individual institutions, the project will identify opportunities for DFIs to further develop qualitative and quantitative assessments of the contribution of their interventions to the ‘low-carbon transformation’ of a given country’s economy.

Publications in this series include:

• A background paper for the March 31st IDFC Climate Finance Forum : Mainstreaming Low-Carbon Climate-Resilient growth pathways into investment decision-making – lessons from development financial institutions on approaches and tools
• Framework Paper 1: Climate and development finance institutions: linking climate finance, development finance and the transition to low-carbon, climate-resilient economic models
• Framework Paper 2: Lessons from the use of climate-related decision-making standards and tools by DFIs to facilitate the transition to a low-carbon, climate-resilient future
• Case Study 1: Integration of Climate Change into the operational activities of Agence Française de Développement (forthcoming)