Inter-American Development Bank

Founded:

1959

Mission:

"To improve lives in Latin America and the Caribbean through financial and technical support for countries working to reduce poverty and inequality, we help improve health and education, and advance infrastructure. Our aim is to achieve development in a sustainable, climate-friendly way."

Total assets:

$152 billion

Headquarters:

Washington DC, USA

Top five shareholders:

USA, Brazil, Argentina, Mexico, Canada, Japan

This page is part of the E3G Public Bank Climate Tracker Matrix, our tool to help you assess the Paris alignment of public banks, MDBs and DFIs.

Metric	Summary
Promotion of green finance	Transformational: The IDB Group is a leader in the development of innovative financial mechanisms to promote green finance. Furthermore, through its IDB Lab it incubates high-potential projects and early-stage ventures. Additionally, its award-winning Green Bond Transparency Platform covers 73% of Latin America and the Caribbean bond issuances (as of 2023).
Fossil to non-fossil energy finance ratio and scaling up climate finance	Some progress: Between 2019 and 2022, for every USD 1 the IDB Group provided to fossil fuels, USD 9.21 went to clean energy, USD 6.69 went to transmission and distribution (which cannot typically be attributed to any one energy type), and USD 3.93 went to other energy (e.g. mixed energy, nuclear, and biomass projects). This continues to be one of the highest ratios of clean energy finance relative to fossil finance among the MDBs included in E3G’s Public Bank Climate Tracker Matrix. However, despite this progress, the IDB Group has yet to fully phase out fossil fuel finance.
Nature based solutions	Paris aligned: The IDB Group has considerably increased its spending on projects with nature based solutions (NBS) components and has implemented institutional level strategies to mainstream NBS across its approvals. It is leading the MDBs in the implementation of COP26’s MDB Joint Statement on Nature, People and Planet, and pioneering innovative financial mechanisms for increased biodiversity finance such as the Ecuador Debt-for-Nature Swap. Moreover, the has been fostering the incorporation of NBS as adaptation measures in infrastructure projects, and continues to lead the long-running Amazon Initiative. However, there is still room for improvement regarding forestry and associated targets, particularly concerning the elimination of agriculture and commodity-driven deforestation.
Climate risk, resilience, and adaptation	Paris aligned: The IDB Group has increased its mobilisation of adaptation finance as a proportion of total climate finance, from 20% in 2018 to 23.9% in 2022, through consistent annual increases in gross figures. However, adaptation finance is still some way short of parity with mitigation finance. In terms of climate risk and resilience, the Bank Group has guaranteed the screening of climate risks across projects through various mechanisms and measures, most notably: the IDB Environmental and Social Policy Framework; the IDB Invest Environmental and Social Sustainability Policy; the specific climate risk assessment methodologies of each financing arm; and the Paris Alignment Implementation Approach (PAIA). It has also increased its efforts to develop its clients’ capacities to address climate risks.
Overarching climate strategy	Paris aligned: Climate change (both mitigation and adaptation) is comprehensively integrated into the IDB Group’s 2024 overarching strategy as a dedicated focus area. There is clear reference to the deep interlinkages between climate and development, and that the with the Paris agreement from 2023 onwards, according to the PAIA. The Climate Change Action Plan 2021–2025 outlines action areas for implementing the joint MDB Paris alignment “building blocks”. While it is less comprehensive in setting out specific institutional level reforms and actions required, it is complemented by the IDB Group’s Paris Alignment Implementation Approach (PAIA) which includes sector-specific guidance on energy, water and sanitation, transportation, agri-food systems, operations with financial institutions, manufacturing industry, buildings, and digital economy. Neither the institutional nor the climate change strategy documents explicitly refer to the principle of “do no harm”.
Integration of climate mitigation and resilience in key sectoral strategies	Paris aligned: Mitigation and adaptation are generally well integrated and balanced across all IDB sectoral framework documents (SFDs). The IDB also has a dedicated Climate Change Sector Framework Document, which covers the cross-cutting integration of climate across all sectors. The Paris Agreement features clearly in the energy, transport, agriculture, and urban development SFDs. However, it receives only cursory mention in the water and sanitation SFD.
Institutional leadership	Transformational: The IDB has displayed strong institutional leadership. It actively works to convene public development actors (such as through co-hosting the 2023 edition of the Finance in Common Summit) and has led MDB action on biodiversity and adaptation. Moreover, its NDC Invest initiative was the first “one stop shop” NDC implementation support initiative among MDBs, and its green bond work remains standard setting.
Energy access and fuel poverty	Some progress: The IDB dedicated 18.59% of total energy financing in the fiscal period 2018–2022 to energy access. The Bank has committed to the Sustainable Energy for All initiative (targeting universal energy access by 2030) in the Americas but does not have an explicit commitment to connect the last 16.2 million people in the region without access to electricity. There remains limited evidence that the Bank’s progress tracking on energy access is sufficiently granular and comprehensive, with the sole exception of the aggregated indicator on “improved access to energy services” within the Corporate Results Framework. Relevant strategy documents do not consistently include a quantifiable, time-bound target for energy access (nor a minimum definition for access, such as through the Multi-Tier Framework).
Energy efficiency strategy, standards and investment	Some progress: Through applying its Paris Alignment Implementation Approach (PAIA), the IDB Group has made progress on incorporating minimum energy efficiency standards across key infrastructure sectors, including both buildings and transport. The Bank Group does not appear to apply an overarching “energy efficiency first” principle to any infrastructure sectors, with the exception of the transport sector which uses an “Avoid–Shift–Improve” approach and prioritises upgrading existing infrastructure. The IDB does not appear to follow best practice in passing on robust minimum energy efficiency standards to financial intermediaries and their subprojects.
Fossil fuel exclusion policies	Some progress: The IDB Group has a strong exclusion policy for coal, covering all thermal coal mining, coal-fired power generation and associated facilities, as set out by the Environmental and Social Policy Framework (ESPF). Exclusions on oil and gas are fairly robust in practice, following US Treasury’s 2021 Guidance on Fossil Fuel Energy at the Multilateral Development Banks. However, these criteria are yet to be publicly endorsed. Moreover, there is still uncertainty surrounding the analysis and thresholds involved in the decision making process for the “exceptional circumstances” where fossil financing is permitted.
Greenhouse gas accounting and reduction	Some progress: The IDB Group has a comprehensive system in place for assessing GHG emissions at the project level, covering the seven sectors that dominate the GHG emissions footprint of its portfolio, and with a relatively low inclusion threshold of 25 ktCO₂e/year which reflects good practice. At the portfolio level, the IDB Group tracks both (gross emissions) across its approvals, although the emission scopes included in its accounting differ across these two metrics. The IDB Group currently has no emissions reduction target and no target for peaking and reducing absolute emissions across its approvals.
Shadow carbon pricing	Some progress: The IDB does not consistently apply a shadow carbon price across its operations, with application being optional on a project-by-project basis. Where it is applied, project teams are recommended to use the dynamic price range recommended by the High-level Commission on Carbon Prices (HLCCP), and to calculate this for all alternatives being considered. While the selective use of a shadow carbon price may be justifiable, the IDB does not appear to a supporting rationale for this practice, nor any guidance to project teams regarding when and why shadow carbon pricing should be applied.
Country level work	Transformational: The IDB’s Country Strategies integrate climate mitigation and adaptation and aim to address the priorities of countries’ Nationally Determined Contributions (NDCs). Furthermore, the Bank proactively supports transformational initiatives for deep decarbonisation (e.g. the Deep Decarbonisation Pathways in Latin America and the Caribbean programme) and to update and increase the ambition of NDCs (e.g. NDC Invest). The IDB has made a concerted effort to relocate staffing capacity to country offices to better support the institutional capacity of client countries and better connect country level work to broader IDB operations.
Technical assistance for implementing Paris goals	Transformational: Beyond supporting the implementation of NDCs, the IDB actively supports their revision to raise ambition through its standard-setting NDC Invest platform. Among the countries in its region of operation, it proactively seeks compatibility with a 2 °C temperature trajectory and pushes for 1.5 °C compatibility where possible. Beyond NDC work, the IDB has also supported country level fossil fuel subsidy reform. Furthermore, IDB Invest will support partner financial institutions to progressively become Paris aligned in their operations. This is realised through the counterparty-based alignment approach set out in the financial institution sector guidance of the broader Paris Alignment Implementation Approach (PAIA), as well as through the establishment of dedicated climate Advisory Services for partner financial institutions (including regional NDBs).
Transparency of climate finance data	Some progress: The IDB’s sovereign lending portfolio ranked 3^rd in the 2023 DFI Transparency Index, having consistently been rated as “very good” since 2016. This reflects the Bank’s strong disclosure practices in key areas, such as its provision of the project level data underlying its submission to the Joint Report on MDB Climate Finance in a downloadable spreadsheet format (representing best practice among the MDBs). However, there remains room for improvement, particularly with its financial intermediary lending lacking sufficiently granular disclosure. For the non-sovereign portfolio of IDB Invest, the overall disclosure score was lower, yet it still ranked 5^th among DFIs with non-sovereign operations covered by the DFI Transparency Index. Elements of best practice reporting are evident, e.g., its sustainable bond programme and TCFD reporting, but there is notable room for improvement. As with the sovereign arm, areas for potential improvement include intermediary financing disclosures and associated subprojects.