Some 30% of AFD’s climate financing will provide biodiversity benefits by 2025. What will this change in practice?
Gilles Kleitz: Scientists agree that we won’t be able to meet the Paris Climate Agreement goals of limiting global warming to +1.5°C or +2°C in 2100 without counting on healthy and protected ecosystems such as forests, oceans, soils, and others. These nature-based solutions to climate change have the potential to provide a third of the solutions needed to mitigate and adapt to climate change.
Less than 5% of climate finance is currently devoted to such nature-based solutions. But there is a community of stakeholders who, for the last several years, are in agreement that funding for these must be strengthened. At AFD, we’ve taken the bull by the horns and are increasing the share of our climate-related financing that has a direct positive impact on biodiversity. This share is currently 20% and will increase to 30% by 2025. The United Kingdom and Norway are set to announce similar commitments looking toward 2030.
The actions financed will have a dual effect, on climate and on nature, in the fields of agroecology, coastal development, the fight against deforestation, and the development of green cities. We will make our climate-change portfolio, which is now heavily centered on the energy transition – even greener. The President of the Republic announced that France's international contribution for the climate will increase to €6 billion per year, which will help strengthen nature financing.
AFD has also undertaken to double its financing targeting biodiversity. What impact can we expect from this new policy?
AFD devoted €527 million to biodiversity protection in 2020. Our goal is to increase this amount to €1 billion per year by 2025. This amount will enable us to be even more active in several sectors: agroecology; sanitation; watershed management; management and protection of forests, oceans, and their resources. At the same time, we’ll be able to support biodiversity development projects in urban and peri-urban areas.
Another huge project that we’ll support is ecological and sustainable development in the Sahel. To do so, AFD will provide financing over the next five years for wide-ranging local and national projects. These will include agroecology and certified value chains, savanna restoration, more sustainable management of firewood and its replacement by renewable energies like solar energy that have less impact, and the fight against land degradation. All this will be interconnected with social objectives to help people living in rural areas, especially women and youth. This is the “Great Green Wall” project.
How is AFD helping to mobilize development banks on these issues?
Our partner-based efforts on these subjects are taking a new turn, as we actively encourage dialog on biodiversity among public development banks. We began this work a year ago, within the International Development Finance Club (IDFC), which AFD chairs. We are helping each member of this group of 26 public development banks to develop a biodiversity strategy, draw up a risk policy to limit environmental degradation (in particular through the creation of a list of financing exclusions), and put into motion the financing of a nature-friendly economy.
The public development bank summit “Finance in Common” held in November helped to build a community of bilateral, multilateral, and national public financial institutions determined to make biodiversity be better taken into account. In the environmental sector, public development banks have a dual role of being a driving force and of setting standards. We are trying to convince private investors to take a bit more risk with a bit less return, so they can make a positive impact on the planet.
On a strictly financial level, we are also supporting an effort by more than 60 partners, private and public banks, nature protection associations, and governments (including France) to set up rules for monitoring the relationships and impacts between financial investments and biodiversity. This will take the form of a group launched at the One Planet Summit: the “Task Force on Nature Related Risks” (TNFD). Its work is crucial, just as this type of effort has been for the climate.
