9 July 2015: Six multilateral development banks (MDBs) and the International Development Finance Club (IDFC) have released a document titled ‘Common Principles for Climate Change Adaptation Finance Tracking,’ which outlines the approach the banks have agreed to take in measuring adaptation finance commitments and flows. The common approach is expected to improve consistency in reporting and consequently boost confidence that funds are flowing to vulnerable societies dealing with climate change impacts.

The agreement comes as countries are preparing for the 21st session of the Conference of the Parties (COP 21) to the UNFCCC in November-December 2015 in Paris, France. According to World Bank Group Vice President and Special Envoy for Climate Change Rachel Kyte, the agreed approach is a “significant milestone” that “paves the way for greater transparency in financial flows and hopefully will help underpin greater commitment in Paris.”

The document defines what is counted as adaptation finance because, according to the financial institutions, “what gets measured gets managed” and can be directed to areas and countries in greatest need. The Principles, which will be subject to further refinement and revision, include three key steps in the tracking process: setting out the context of risks, vulnerabilities and impacts related to climate variability and climate change; stating the intent to address the identified risks, vulnerabilities and impacts in project documentation; and demonstrating a direct link among the identified risks, vulnerabilities and impacts, and the financed activities.

The MDBs that adopted the Principles are: the African Development Bank (AfDB); the Asian Development Bank (ADB); the European Bank for Reconstruction and Development (EBRD); the European Investment Bank (EIB); the Inter-American Development Bank (IDB); and World Bank Group. The MDBs invite other financial institutions to adopt the Common Principles and note that they do not preclude the adoption of international mandatory standards under the UNFCCC. [World Bank Press Release] [Common Principles for Climate Change Adaptation Finance Tracking] [IDFC and MDBs Press Release]