Chapter 1 | INTRODUCTION
Sustainable development is a multi-faceted and increas- ingly complex challenge. As the world emerged from the COVID-19 crisis, it became clear that achieving the Sustainable Development Goals (SDGs) by 2030 would be extremely challenging. Additionally, the impacts of climate change have worsened in recent years, further reversing progress towards SDG targets. The Paris Agreement and the SDGs, both adopted in 2015, reflect a shared vision for sustainable development in the context of climate change. This vision requires integrating efforts to shift to a low-carbon and climate-resilient path- way while pursuing core development goals. The landmark Paris Agreement aims to strengthen the global response to the threat of climate change by keeping global warming “well below” 2°C above pre-industrial levels and striving to keep warming below 1.5°C. It also emphasizes adaptation, resilience and low emissions development in line with ad- equate food production and drastically increased climate financing. Accurate tracking of climate finance flows has become a priority for governments, NGOs, researchers, donors and other stakeholders. In response, multilateral development banks (MDBs) developed a methodology in 2011 to track climate finance flows consistently, comparably and trans- parently. 1 That same year, MDBs published the first Joint Report on Climate Finance, establishing a harmonized methodology for tracking flows. This initial methodology covered climate finance data for a group of emerging and developing economies, including low- and middle-income as well as some high-income countries. By 2015, MDBs, in collaboration with the International Development Finance Club (IDFC), agreed on common principles for climate
finance, including mitigation and adaptation. 2 This initia- tive aimed to create a unified approach for publicly-owned banks to track and report climate finance. The annual re- port was significantly expanded in 2019 with data for all countries in which MDBs operate, while also focusing on improving transparency through income-level classifica- tions. In 2021, the MDBs and IDFC updated the Common Principles for Climate Change Mitigation Finance Tracking. This update included a more granular breakdown of eligi- ble activities and clear criteria for tracking climate finance. Further improvements were made in 2022 when the MDBs updated their joint methodology for tracking adaptation finance. 3 This update, reflecting the evolving understand- ing and advancements in adaptation finance, was launched at COP27 and implementation began in 2023. 4 MDBs con- tinue to enhance their climate finance tracking and report- ing methodologies as part of their commitment to align- ing financial flows with the Paris Agreement. They are also focusing on improving the assessment and reporting of climate outcomes and impacts, working with the interna- tional financial institution working group on greenhouse gas (GHG) accounting, and contributing to impact report- ing for green bonds and climate resilience metrics. As part of the global development finance community, the OPEC Fund is fully committed to the goals of the Paris Agreement and engages with many partners in the Global South to address climate change issues. In 2022, in line with the OPEC Fund Strategic Framework 2030, the institution adopted a Climate Action Plan to channel climate invest- ments more systematically. Concurrently, the OPEC Fund joined the international community in accounting and dis- closing its climate financing in accordance with the MDB tracking methodology.
1 EBRD: https://www.ebrd.com/what-we-do/sectors-and-topics/mdbs-climate-finance.html 2 MDB Joint Report: https://thedocs.worldbank.org/en/doc/3258e1d4c1e84fd961b79fe54e7df85c-0020012023/original/2023-0128-MDB-Report-2022-NEW.pdf 3 https://www.eib.org/en/publications/20220242-mdbs-joint-methodology-for-tracking-climate-change-adaptation-finance 4 MDB Joint Report: https://thedocs.worldbank.org/en/doc/3258e1d4c1e84fd961b79fe54e7df85c-0020012023/original/2023-0128-MDB-Report-2022-NEW.pdf
9
Powered by FlippingBook