Development banks join forces to tackle climate change

Rémy Rioux recntly became head of development banks' club IDFC. [French Development Agency]

The CEO of French Development Agency (AFD) was appointed to lead the International Development Finance Club (IDFC), uniting credit institutions worth $3,000 billion. Their objective: to throw their weight behind sustainable development. EURACTIV France reports.

Finding solutions to meet the Sustainable Development Goals (SDGs), but also the Paris Agreement targets. This is the mission for IDFC members – 23 national, international and regional development banks.

These heavy-weight development financiers united in 2011 and are worth $3,000bn (€2,500bn), and can issue $630bn (€533bn) of credit a year, including $100bn (€85bn) for  the climate.

“The combined weight of these banks is four to five times that of multilateral banks such as the World Bank or the European Investment Fund,” explained AFD’s Alexis Bonnel.

The AFD, German bank KfW, African credit institutions (BOAD and DBSA) and the chinese CDB joined forces to influence international negotiations where, despite their combined economic weight, they have little say.

Anglosaxon banks are not members of IDFC – their model is based on donations, not credit.

New presidency

Rémy Rioux – head of AFD – was appointed president of IDFC in mid-October, a position he will hold until 2020. Formerly head of Pierre Moscovici’s cabinet, Rioux sets out his ambitions for the next 24 months: “Development policy is not about France’s influence abroad! We have abandoned that approach. Our focus is to manage common resources together, like our climate,” he explained.

Climate change is one of AFD’s priorities, and development banks are slowly greening their investments. “Today, 50% of AFD projects have a positive climate impact. We want to get 100% compatibility with the Paris Agreement by 2020.”

Rémy Rioux plans to encourage this development, especially on the climate finance dossier: “Bankers don’t sit at the COP [UN’s climate conference]. This is the challenge of negotiating climate financing. Parallel meetings happening outside of COP are important to meet bankers and finance institutions, as it will be the case in Frankfurt, an initiative organised by IDFC on the sidelines of COP23.”

Paris Agreement success

“The success of the Paris Agreement will largely depend on financial actors. I wish to use this club as a propelling force next to international organisations for the attainment of our sustainable development goals [SDGs],” claimed the new IDFC president.

The SDGs, adopted by the international community in 2015, have so far been “nonoperational”, regretted AFD’s Alexis Bonnel. “And credit institutions, especially development banks, must push for their achievement.”

Another priority for Rioux is reaching a common definition of climate change adaptation funding, one of the corner stones for achieving the Paris Agreement. But also, initiatives on education and urban development.

IDFC could also build a common financial strength by creating a co-financed fund, a proposition under discussion among its members. “It is however too early to know how much the fund should receive in order to be effective,” said Rioux.

IDFC’s ambition in the fight against climate change will find its first testing ground at COP23 in Bonn, Germany, from 6 to 17 November. But also at the climate summit organised for the 12 December by Emmanuel Macron.

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