Since 2011, the International Development Finance Club (IDFC) has conducted a periodic mapping of member institutions’ green finance contributions. In 2020, cumulative green finance commitments by IDFC members surpassed the $1 trillion mark since the Paris Agreement was signed. This is a major milestone, which materializes IDFC members’ ability to deliver on unprecedented flows of green finance.
Adaptation finance continued to grow, increasing by 42% over 2019 and more than fivefold compared to 2016 to reach $27.5 billion. Mitigation finance suffered a shortfall in 2020, driven, at least in part, by the COVID-19 pandemic and the need to allocate resources to emergency response and economic recovery. Despite this challenge, six institutions increased their green commitments in 2020, compared to 2019. In light of new priorities triggered by the economic response to the COVID-19 pandemic, IDFC institutions redistributed their green financing efforts towards adaptation and resilience while also including more conservation efforts. Indeed, at the inaugural 2020 Finance in Common Summit, IDFC members com- mitted to step up investment in conservation, sustain- able use, and the restoration of biodiversity. To better reflect these priorities, this year’s Green Finance Mapping (GFM) report separates IDFC finance commitments to biodiversity projects, alongside conventional climate finance and other environmental objectives.
Such efforts form part of a broader trend that acknowledges the intersectionality between the climate and biodiversity crisis, both in terms of causes, consequences, and potential (policy) solutions.
2020 KEY FINDINGS
- IDFC members reported total green finance commitments of $185 billion. This represents a 6% decrease from 2019, primarily driven by the impact of the COVID-19 pandemic.
- In 2020, green finance represented approximately 20% of total new commitments reported by IDFC members. Since 2015, green finance commitments have consistently represented more than one-fifth of total IDFC investments.
- Climate finance—consisting of all activities related to the mitigation of greenhouse gas (GHG) emissions and adaptation to climate change—accounted for 96% of total green finance (or $178.5 billion).
- Finance for green energy and mitigation of GHGs was the largest climate finance category, representing 82%. However, in the context of a challenging year, mitigation finance declined 10%, primarily driven by lower commitments for the transport sector.
- Adaptation projects represented 15% of climate finance, an increase of 42% from 2019. This continues four years of consecutive growth, achieving over five times the level of adaptation commitments in 2016.
- Finance to projects containing elements of both mitigation and adaptation has been steadily increasing, but remains a small portion of total climate finance, at 2.6% (or $4.7 billion).
- Finance for biodiversity projects reached $14 billion in 2020. This includes, for example, finance for water supply, wastewater treatment, biodiversity conservation, and waste management, among others.
- Additionally, IDFC members reported $1.4 billion of finance for other environmental objectives.