The New Development Bank (NDB) says its target of 40% of its approved financing for climate change related projects from 2022 to 2026, integrating climate risks measures into project designs and tracking climate finance each year.
The 9th Annual Meeting of the NDB is being held in Cape Town.
The NDB said it has established a sustainable finance policy framework, to manage green, social and sustainability bonds, as well as other debt instruments in international and domestic capital markets.
“The framework has obtained a second party opinion from sustainalytics, which confirms that the framework is credible, impactful and aligns with core components of global principles, including the Green Bond Principles and Social Bond Principles developed by the International Capital Market Association,” said the NDB representative.
The NDB said its recent projects, which were funded by the $1.25 billion green bond, align with sustainable finance principles and support of clean transportation, renewable energy and sustainable water management.
It said that, these include projects the development of offshore wind power and solar power.
“Other projects include public transport development, such as the subway, rapid transit system and green buses. In the water sector, projects that contribute to the rehabilitation of the canal system, restore crucial water bodies and its adjacent ecological systems have been supported using the green bond proceeds.”
Furthermore, the NDB said it has set a 40% climate finance target in its second strategy, to incorporate climate risk and environmental impact assessment.
The strategy seeks to allocate 40% of approved financing during 2022-2026 to support climate change mitigation and adaptation activities.
“We follow the joint Multilateral Development Banks (MDBs) methodologies to track climate finance and report it annually together with other MDBs.”
“At NDB, we take climate finance tracking as one effective means to build quality infrastructure assets. As a cross-cutting project consideration, we try to integrate measures that address climate risks – to the extent applicable - as early as the design phase for each project we conduct,” it said.
It further said that to support developing countries in combating climate change and reducing poverty it has set in its second strategy a 40% climate finance target, aiming to allocate 40% of approved financing from 2022 to 2026, to support climate change mitigation and adaptation.
“In the first half of the strategy cycle, NDB made a total of $2.1 billion in climate finance. Of this, $1.6 billion was dedicated to climate mitigation activities, with the remainder supporting climate adaptation activities. Overall, climate finance accounted for 34.5% of the Bank’s total approvals over the period,” the representative added.
The NDB said that climate mitigation finance has dominated its climate investments, funding projects that promote the use of renewables, energy efficiency, and transport modal shifts.
Additionally, it acknowledged the significance of low-emission transition, citing that it is fully aware of the potential socio-economic consequences associated with the process.
“The Bank commits to supporting a just transition to ensure that no one loses, and no one is left behind during low-emission transition. As a signatory to the MDB Just Transition High-Level Principles, we are currently developing our institutional approach on this front to guide the Bank’s operations and activities.”
It added, “Many of the projects supported by the Bank have generated positive socio-economic impacts besides environmental sustainability.”
The NDB said it has provided financial support in South Africa, for projects that promote renewable energy development and its storage through battery systems, which aid in reducing carbon dioxide (CO2) emissions, and create jobs in emerging industries.
Despite that, it continues to battle with challenges in promoting sustainable finance, with the demand for sustainable finance to support infrastructure being one of them.
“Sustainable development has continued to evolve, growing even more so in recent years across emerging markets and developing countries (EMDCs). The widening investment gap required to achieve the SDGs and Paris climate goals in EMDCs remains to be fulfilled.”
It said that it plans to expand its sustainable finance initiatives with new projects in the coming years.
“As set out in the current General Strategy, we aim to provide a total of $30 billion in approved financing from the Bank’s balance sheet over the 2022-2026 period in support of infrastructure and sustainable development projects.”
To support strategy implementation, the NDB said it plans to continue and strengthen efforts in resource mobilisation through expanding financing instruments, as well as raising and deploying local currency financing, among others.
IOL