A Pathway Towards Paris Alignment and Enhanced Climate Action

The IDB Group will lead with resolve toward ambitious new targets on climate action

As one of the leading development partners for Latin American and the Caribbean (LAC), the Inter-American Development Bank Group (IDB Group) is fully committed to lead by example on climate change action. Since the signing of the Paris Agreement, the IDB Group has provided over $20B in Climate Finance, amounting to about 60% of all Climate Finance to the region from MDBs.

Nonetheless, the COVID crisis during the past two years has undeniably raised the stakes. On the one hand, our region has experienced a substantial increase in poverty and the worst GDP contraction in two centuries. In many ways, COVID-19 has been demonstrative, in scale and depth of impact, of the harm that insufficient preparedness to respond to climate change could inflict on our societies, especially on the most vulnerable. On the other hand, the pandemic has nurtured an appetite for change. The sudden and profound shifts in markets and behaviors allow for a reimagining of the region's future in ways no one could have anticipated.  

Our Vision 2025 and our Climate Change Action Plan 2021-2025, both published in 2021, respond to these realities with acute awareness of the fiscal constraints LAC countries are experiencing, but also with steadfast resolve to harness this moment to steer the region towards low carbon and climate resilient development. We do this by laying out the concrete steps we will take to ensure each of our 26 borrowing member countries has access to the resources and tools it needs to promote a green, sustainable, and potentially transformational economic recovery.

Our commitment to LAC in Glasgow is that we are prepared to go even further. We must strive to enhance our role in the green economic recovery and respond with ambition and accountability to the mounting challenge of climate change. For this reason, we are setting aspirational targets to align 100% of new operations with the Paris Agreement (PA) goals by January 2023, and to deliver a total of US $24 billion in green and Climate Finance in the next four years.¹ We are also ready to redouble our efforts to mobilize private capital for climate action and to deploy capacity building efforts at a pace and scale that meet the magnitude of the challenge ahead.

To be accountable for these targets, the IDB Group is committed to improving the coherence and transparency of its reporting. Throughout 2022 we will be developing a new green finance accounting methodology. The new approach will allow us to fully capture the value of green contributions and incentivize the catalytic sustainability investments needed to shift emissions and climate vulnerability trajectories in the region.

These efforts will require us to build capacities at an unprecedented scale, both within the Bank and on various external fronts. To lead these efforts, we have already started placing climate change and sustainability specialists in country offices across the region. We have increased our presence from five countries in 2020 to 15 countries in 2021, aiming to cover all 26 countries by 2024. These movements will better enable our country specialists to work with governments on climate policy and plans, aligning our ordinary capital finance with national climate plans and policies, and helping countries to access concessional finance and mobilize private finance for delivering national commitments.

With our firm grasp of the key issues driving development and investment in the region, the IDB Group will continue to help build the capacity of our partners. In doing so, we will ensure climate action is not merely compatible with economic growth; rather, our raised ambition on climate and our commitment to work with our partners towards decarbonization, will be the drivers of innovation for a new era of competitiveness in the LAC region.

¹This commitment is pending approval by IDB Group’s Board of Directors, expected in 2022.