The last eight years were the hottest on record, according to the World Meteorological Organisation. During 2022, we have seen lethal floods and droughts all over the world with severe and long lasting effects on societies and economies. But this is only the beginning. Global temperature is expected to rise to 2.8C by end of the century, if current national climate plans don’t change. The consequences for humans will be severe and affect every corner of the world. “We are on a highway to climate hell,” says UN Secretary-General António Guterres, “with our foot still on the accelerator.”
At the UN’s COP27 climate conference in Sharm el-Sheikh, Egypt, delegates must deliver action on adaptation for countries most vulnerable to climate change. As the Global Centre for Adaptation says in its latest State and Trends in Adaptation Report 2022: We must have adaptation in mind in everything we do.
Cooperation is the key
Multilateral Development Banks have an important role in supporting green investments that build climate resilience across the world. In 2021, global adaptation finance by multilateral development banks reached more than €19 billion. This signals a positive upward trend in adaptation finance. But we must do much more to meet the urgent needs of vulnerable regions.
At COP27, multilateral banks issued a joint statement on climate, committing to a boost in adaptation finance, especially to low-income countries, small-island developing states, and disadvantaged populations. On adaptation and agriculture day at COP27, these banks organised a joint event on adaptation finance where I presented the updated multilateral development bank methodology for adaptation finance tracking. The methodology:
- provides clarity on what defines an adaptation investment;
- better reflects adaptation needs in a wide range of vulnerable sectors;
- and conveys the broader range of financial products that multilateral development banks now use to deploy adaptation finance
It may sound very technical, but the methodology is extremely important for understanding what adaptation activities can be financed to protect lives and livelihoods from the impacts of climate change—from small adjustments needed to future-proof individual assets to transformational changes that put economies on a path to climate resilience.
A plan for adaptation
At the European Investment Bank, we are currently in the implementation phase of our first Adaptation Plan, which we announced at the UN climate conference in Glasgow in 2021. Our plan has three main elements:
- Faster finance to help reduce the risks of climate change
- Ensure all projects include robust information on the impacts of climate change
- Support for least-developed countries and small-island developing states
We know that pervasive market failures are holding back investment in adaptation. This is why the European Investment Bank is committed to triple its adaptation finance by 2025. To scale up adaptation finance, we are ready to take on more risk. Typically, we finance up to 50% of a project. We have decided to increase this to 75% for projects that are primarily motivated by adaptation. We will go up to 100% for adaptation projects in the most vulnerable parts of the world, including small-island developing states and least-developed countries.
Smarter adaptation solutions
Climate, innovation, and development are inseparable. So it’s important to foster collaborations around smarter, more systemic adaptation—for instance, by closing the climate data gap. For this purpose, the European Investment Bank and the European Centre for Medium-Range Weather Forecasts, which hosts the remarkable Copernicus Climate Change Programme, have created a powerful partnership. This will make high-resolution climate data available to our clients all over the world.
As a public sector bank, the EU bank plays a key role in de-risking investments in innovative adaptation solutions, such as technologies to save water or anticipate weather extremes, research in drought resistant crop breeds, and satellite observation for earth monitoring. We work closely with the private sector in this area, from small agricultural producers to large corporates. An example is the Climate Resilience and Adaptation Finance Technology Transfer Facility. This is the first private-sector fund dedicated to resilience to climate change in developing countries. It invests in private sector companies providing adaptation solutions.
Supporting adaptation in Africa
We also want to promote adaptation at a more systemic level, looking beyond single projects. We are working with individual countries to translate national adaptation plans and strategies into a pipeline of projects that we can finance.
Earlier this year we launched EIB Global, a new, specialised branch of the European Investment Bank dedicated to development finance. This will increase the European Union’s value proposition in adaptation investment. It means more people and expertise on the ground, more tailored financial solutions, and a strong Team Europe approach. In Africa, we stand shoulder to shoulder with the Africa Adaptation Acceleration Program of the African Development Bank, and we are exploring ways of potentially making our European advisory platform “ADAPT” available to clients globally as well.
Concrete adaptation projects from multilateral development banks
What does this mean in terms of real projects on the ground?
In Benin, we are supporting climate resilient infrastructure in eight secondary cities through the extension and rehabilitation of rainwater drainage systems and related road projects. With our backing, 300 000 people in the Lesotho Lowlands will have access to treated, piped water. In Kenya, we are investing in cold-chain solutions to reduce the impact of extreme heat on food and pharmaceutical products. We are collaborating with the African Development Bank and the Africa Adaptation Acceleration Program to support the development of port infrastructure in Banjul, in the Gambia, that’s more resilient to future sea-level rises.
So much more must be done—and fast—to drive more finance to those who need it most. We can’t pretend climate change isn’t happening. As we bring it under control, we have to ensure that all humanity can live safely with its consequences.