Alignment with the Paris Agreement

In practice, development cooperation interventions almost always involve more than one lever. Policies and regulatory measures depend, for example, on the ability to develop and implement policies. Similarly, financial support will be provided not only to fill a funding gap, but may also be combined with technical assistance to support the ability to implement and maintain associated new technologies. Policies shape both policy and investment, as policies determine the scope and framework of private economic actors operating in a country, both domestically and abroad, who are able to free up and direct financial and financial resources. The vast majority of respondents (21 out of 23) say they support developing countries in strengthening their NDCs, either directly through specific support for the design, review and implementation of NDCs, or tangentially by supporting the integration of climate into sectoral policies and planning. Technical assistance to NDCs includes support for the creation of political momentum for greater ambition; institutional and technical capacity development; the implementation of sectoral policy reforms; Bilateral organizations that responded to the survey report that they work with developing countries on these issues directly and through transnational platforms supporting NDCs such as the NDC Partnership. [51] Whitley, S. et al. (2018), Making Finance Coherent with Climate Goals: Insights for Operationalising Article 2.1c of the UNFCCC Paris Agreement, Overseas Development Institute, World Resources Institute, Rocky Mountain Institute, E3G,

To align with the goals of the Paris Agreement, development cooperation service providers need to understand more than the short-term needs of sustainable development in the face of climate change. They also need to understand and support long-term system-wide transformation (World Resources Institute/UNDP, 2018[11]). Note: Percentages represent the shares of concessional development finance as the share of total development finance committed in each year by type of supplier. OFOs are other official flows. While these four characteristics are not exhaustive, they highlight important considerations for development cooperation providers in interpreting and prioritizing the Paris alignment. Taken together, they summarize what the Paris alignment means for development cooperation and highlight that suppliers will make a positive contribution to the necessary transformation by making the best use of their resources, connecting and engaging with the right actors, and using established mechanisms to support climate action and increase ambitions in line with the goals of the Paris Agreement. Nevertheless, it makes sense to distinguish between development banks and DFIs based on their partner entities and the use of financial instruments. More generally, bilateral and multilateral development banks operate in both the public and private sectors. The public sector activities of bilateral banks and MDBs provide debt financing and, to a lesser extent, subsidies. With regard to their partner institutions, these institutions cooperate to a large extent with the public sector; The private sector operations of development banks have a specific mandate to cooperate with the private sector. Many DAC members also have bilateral DFIs.

DFIs and the private sector operations of development banks provide equity, loans, guarantees and insurance, for example for private sector infrastructure projects, mainly on non-concessional terms. Commitments to climate-related targets vary from region to region, but the particularly high and low shares of climate-related finance in some regions are usually due to certain countries. Only 12 countries received climate-related financing representing more than 40% of total development finance in 2013-2017, and each of these 12 countries received different shares for different climate goals (Figure 2.10). Over the same period, climate-related finance accounted for less than 10% of all development finance in 26 countries. These figures underline the importance of both countries` climate action and the improvement of ambitions through NDCs, for which development cooperation plays a key role. The 7 countries that receive more than half of their development finance commitments with climate-related goals declare national sustainable development goals in their respective NDCs or are small island developing states that value disaster risk reduction and equity. Of these, 7, 3 (Bolivia, India and Thailand) explicitly aim to anchor their respective NDCs and SDGs. India and Thailand also explicitly link the achievement of their NDCs to the achievement of the SDGs.

Taking into account the objectives and mechanisms set out in the Paris Agreement and the fundamental development principles that complement them, this report proposes four main features of development cooperation that are effectively aligned with the Paris Agreement, namely: The Paris alignment paradigm (section 2.4) is useful for the analysis of financing for development, in particular the extent to which financing for development circulates and that of the Paris Agreement. they supported activities under the Paris Agreement. This allows for a broader perspective than climate finance, as it goes beyond a subset of climate-funded activities to take into account how project portfolios as a whole align with the Paris goals. Not all activities in all sectors of a given portfolio will be relevant, but integration should go beyond sectors that are generally considered climate-related (e.g. B agriculture and environmental protection), and in all areas where there is sufficient evidence of impact on climate objectives. Since all developments related to climate change take place, suppliers should take into account the relevance and potential impacts of climate change in all activities and, where appropriate, integrate the objectives. The Dutch Development Finance Corporation (FMO) focuses on private sector financing in developing countries. In terms of portfolio size, it is the largest member of the Association of European Development Finance Institutions. In 2017, as part of a new sustainability policy, the FMO committed to using its investments to contribute to the goals of the Paris Agreement, in particular by limiting global temperature rise to well below 2°C and preferably to 1.5°C (FMO, 2019[47]). This commitment is included in the FMO strategy, which focuses on SDG 13 (climate action) as a key priority. It also reflects the FVO`s approach to sustainability, which includes an exclusion list (e.B.

for coal); the selection of environmental, social and corporate governance risks; and the proactive promotion of sustainable finance through a green label. .