The world’s leading multilateral development banks (MDBs) have committed to a significant boost in climate finance for low- and middle-income countries, pledging $120 billion per year by 2030. The announcement was made on Tuesday at COP29, the UN Climate Change Conference currently underway in Baku, Azerbaijan. The group of ten MDBs, including the World Bank, European Investment Bank, and Asian Development Bank, agreed on the target to support climate adaptation and mitigation in poorer nations.
The new annual funding target represents a 70 percent increase over the amount these banks allocated in 2023, with $42 billion specifically earmarked for adaptation to extreme weather impacts. The banks aim to use this increased financing to leverage an additional $65 billion in private sector investment to support climate goals.
World Bank President Ajay Banga emphasized that mobilizing trillions in private investment would be crucial to meeting global climate finance needs. Speaking at a panel discussion, Banga predicted that private sector contributions would eventually exceed the $65 billion target set by the MDBs, given the growing recognition of climate risks. Similarly, European Investment Bank President Nadia Calvino noted the private sector’s increasing involvement, highlighting that climate-related costs are becoming unsustainable.
“We can spend time just discussing issues, but I think it’s better to get on with it and work as best as possible, together to mobilize green finance, public and private, and have maximum impact on the ground,” Calvino stated at the event.
The MDBs also cautioned that their ability to expand financing depends on the commitment of shareholders from both developed and developing nations. Their pledge aligns with the United Nations Environment Programme’s recent report, which estimates the annual gap for adaptation finance could range from $187 billion to $359 billion, underlining the need for sustained investment.
This year’s COP29 conference aims to set a new global climate finance goal to succeed the $100 billion annual commitment established in 2009, which developed nations had promised to deliver by 2020 to aid developing countries in reducing emissions and strengthening climate resilience. The $120 billion MDB pledge marks a step toward addressing these evolving financial challenges.