Climate

In 2017, the entire AFD Group undertook to make its activity be 100% compatible with the Paris Agreement. This unprecedented commitment bears witness to our proactive stance in climate matters.

Being “100% Paris Agreement” implies analyzing each of the Group’s interventions to see that they are consistent with long-term low-carbon and resilient development in the country where they are implemented. This analysis is rounded out by an assessment of the level to which our investments are exposed to climate risks, be they physical or related to low-carbon transition policies. These analyses are used in delivering the Sustainable Development Opinion given to projects at the examination stage. 

In order to go even further in co-building in climate matters with its partner countries, AFD is setting up the “2050 Facility” dedicated to developing long-term low-carbon and resilient development strategies that the COP21 has asked all countries to produce by 2020.

This commitment comes in addition to another one that already exists within the Group: seeing to it that 50% of annual financing goes to projects that have a direct and beneficial impact on the climate.

In 2022, AFD group committed €6.9 billion to climate financing, representing an increase of 15% compared to 2021 and the highest amount since 2017. Among the projects supported, one in three has co-benefits for biodiversity.

In order to reduce the exposure and vulnerability of societies to the hazards of climate change, the Group has ramped up its efforts to facilitate climate adaptation, allocating €2.2 billion in 2022, twice as much as in 2017.

Climate adaptation is being incorporated into the projects supported by AFD in an increasingly effective way, particularly in the fields of water and sanitation and rural development. In addition, adaptation is being promoted via the second phase of the AdaptAction program, which supports adaptation strategies in vulnerable countries, and through a partnership with the Green Climate Fund, which includes several climate change adaptation programs.

Above and beyond a role of solidarity towards the countries that are the most vulnerable and the least able to seize the opportunities of the green economy, development banks now have a major role to play as a “catalyst” and above all to “reorient” global public and private investment towards investments adapted to countries’ low-carbon and resilient transitions.

AFD is currently seeking to maximize its financing’s snowball effect on the redirection of private investments, largely via credit lines to banks or through direct financing by Proparco, the Group’s private-sector subsidiary.

AFD Group is working with its partners to influence and collaborate on the convergence of norms, practices and standards to develop an aligned framework for sustainable finance, particularly in the areas of climate change and biodiversity.

Since 2021, for example, AFD has published the Task Force on Climate-Related Financial Disclosure (TCFD) report, which aims to demonstrate how the Group complies with the highest international standards for incorporating climate-related risks into its governance, as well as the operations it chooses to finance. This integration of climate risks is reflected in its communication with customers and partners. AFD also participates in the international initiative led by the Task Force on Nature-related Financial Disclosure (TNFD), which has developed a common framework for financial institutions and businesses to assess, monitor and disclose financial risks related to biodiversity loss.

Furthermore, continued dialogue with the European Union on the application of the European taxonomy, along with the system of the United Nations and other partners (IFRS-ISSB, Ipsas), is essential to develop a set of standards for sustainable finance. AFD is also involved in a large number of projects which promote better integration of climate and nature into the strategies and operations of the financial institutions it supports, in particular, via the Mainstreaming Climate Action in Financial Institutions initiative.

Accredited by the Green Climate Fund since 2015, AFD supports its partners with the Green Fund accreditation process, and works on program appraisal, whether alone or together with IDFC members. This accreditation helps organizations develop the capacity to identify and appraise climate-friendly projects, while at the same time updating the frameworks, policies and procedures which relate to the accreditation process.

Since 2017, AFD has accommodated the General Secretariat of the International Development Finance Club (IDFC), a unique global network of 26 national, regional and international development banks, 19 of which are based in developing countries. This network is currently co-chaired by the West African Development Bank and Bancoldex.

Having agreed to new financial commitments amounting to nearly $1.2 billion in 2022, 24% of which is earmarked for climate change projects ($282 million), the IDFC is the world’s leading public funder of climate initiatives.

AFD is working with the IDFC in a range of areas, including on the implementation of the Paris Agreement, an accounting methodology for climate financing (for mitigation and adaptation), and the joint commitments made by the IDFC and a group of multilateral development banks at the One Planet Summit (held on December 12, 2017, with these commitments renewed in 2021).