The global climate crisis has undeniably reached alarming levels, with unprecedented record-breaking temperatures. Recent studies showed that June 2024 marked the thirteenth consecutive month of record-high global temperatures and the twelfth month of consistently breaching the 1.5°C threshold pre-industrial levels of surface air temperature[i]. The acceleration of global warming and extreme weather events, particularly in Asia being the most climate-vulnerable region, has brought devastating loss of life and destruction to communities, underlining the urgency of addressing the crisis. The region has experienced its hottest summers, driest winters, and strongest typhoons. In the past months, different countries in Asia were swallowed by severe flooding, including the Philippines, Malaysia, Indonesia, Thailand, Bangladesh, Pakistan, and many others. The prolonged and accelerating high temperatures are just the tip of an iceberg to picture the threats of this ecological crisis globally.
Scientists across the globe have sounded the alarm: if the trend continues, it is impossible to stay on track to limit global warming to 1.5°C. Dire warnings from the Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report underscored that exceeding this threshold would deem a "code red for humanity."
Azerbaijan and Shrinking Civic Space
This year marks the twenty-ninth year under the climate negotiations on the United Nations Framework Convention on Climate Change (UNFCCC). And yet, countries are still grappling with worsening climate events to date. COP29, held under the theme "In Solidarity for a Green World," will be particularly contentious for a multitude of reasons.
At the helm of the COP Presidency is Azerbaijan. This is the second consecutive year that COP has been hosted by an authoritarian regime and the third consecutive year by a petro-state as Azerbaijan's economy is heavily reliant on fossil fuels. The host country’s notoriety for poor human rights record and history of crackdowns against Civil Society Organizations (CSOs) is indeed a double whammy and creating a limited space for diverse and critical conversations on pressing climate and cross-cutting issues.
The State of Global Climate Finance and New Prospects in COP29
The depth and diversity of this ecological crisis require the mobilization of resources, making climate finance one of the crucial pillars of enforcing climate actions. Amid this survival race, climate finance still needs to catch up to address the scale of the crisis. Between 2021-2022, global climate finance reached $1.3 trillion, but a significant gap remains in meeting the climate imperatives and the needs of both mitigation and adaptation efforts. Studies show that the cumulative cost of climate change in a business-as-usual scenario could exceed ten times the estimated cost of achieving the 1.5°C target[ii]. The manner these resources are delivered is particularly concerning. Notably, a chunk of it is packaged in the form of market-rate loans, therefore putting developing countries at risk of added debt burdens. Development Finance Institutions (DFIs) also continue to play a dominant role, with 57% of public finance being channeled through them.
Accordingly, the focus of COP29 will be on setting new climate finance targets and building up on the previous year’s commitments. The “Road back to Paris” will revolve around the new negotiations for Nationally Determined Contributions (NDCs) in 2025, from which the countries are encouraged to revisit their commitments to keep on track on the 1.5°C targets. But the centerpiece would be the approval of the New Collective Quantified Goal (NCQG). However, the tug of war between the Global North and Global South is expected to continue, especially concerning ensuring that the principle of Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC) is maintained in these new targets.
Joint MDB Frameworks and how ADB and AIIB circumvented their commitments
Beyond the party-states and signatories, the Multilateral Development Banks (MDBs) are increasingly spreading their influence in shaping global climate action, particularly in the areas of climate finance and setting climate targets. The group of MDBs[iii] also pledged their support to the NCQG, sealing their role in this new finance architecture.
A few years back, they adopted joint principles to align their operations with the goals of the Paris Agreement, including mainstreaming climate change into their operations and annual reporting of their climate targets and contributions. The most notable one is the Joint MDB Methodological Principles on Paris Alignment. This joint document was initiated in 2018, but after years of delay, it was finally released in 2023. The joint Paris Alignment guide carries out ‘building blocks’ for MDBs on aligning their investments to the 1.5°C goal.
Zooming in on its premises, it is observable that an extremely limited list of what is considered “Universally Aligned” and “Not Universally Aligned” is placed. Only mining of thermal coal, extraction, and electricity generation from coal and peat are deemed as not universally aligned, which leaves a lot of space for other fossil fuels and heavy GHG emitting technologies such as fossil gas to be considered as universally aligned.
Correspondingly, the MDBs intend the placement of “Specific Criteria Assessment” in evaluating the projects. This implies that if, for example, fossil gas is part of the decarbonization program of the country, then MDBs cannot classify it immediately as ‘Not Paris’ Aligned. This framework, indeed, allows for continued investment in fossil fuels like gas and coal under certain conditions, which undermines the overall goal of drastically cutting global emissions. While these institutions position themselves as conduits of public funds and major stakeholders in the global climate finance architecture,[iv] their track record reflects the lack of due diligence by circumventing their commitments.
Not all MDBs have their individual Paris Alignment commitments. Strikingly, both ADB and AIIB have their respective methodologies and approaches. But throughout the years, these Banks have been backtracking on their delivery.
Asian Development Bank’s False Climate Promises
As the self-acclaimed “Climate Bank of Asia and the Pacific”[v], ADB in 2021 has ambitiously pronounced its operations to be fully aligned with Paris Agreement goals 2023 on its sovereign projects and non-sovereign projects by 2025. Taking into account its Paris Alignment initiatives, the Bank undoubtedly missed the mark.
For one, ADB set a rosy cumulative amount of USD 100 Billion from 2019-2030 for its climate change finance. The disclosed data suggests that the accumulated climate finance hit USD 10.75 Billion in 2023, over which 57.4% is accounted for climate change mitigation and 42.6% for climate change adaptation. Unfortunately, the Bank’s finance initiatives still predominantly rely on loans as compared to grants or technical assistance[vi]. Meanwhile, ADB’s energy sector at present totaled USD 34 Billion, still dominated by loans (55.36% and 38.97% mixed financing with loans).
In the same year, the new Energy Policy was adopted. After years of rallying for policy changes, the Bank finally put an end to new coal investments in writing. It also stipulated the support for early retirement and decommissioning of coal plants. ADB also launched its coal retirement mechanism, touted as the Energy Transition Mechanism (ETM). To date, there are two coal units piloted under the ETM. Various critique over the ADB’s ETM firmly holds that it will only drain public funds, with hundreds of millions of dollars allocated as compensation to coal operators, not for decommissioning, but for refurbishing their plants to use potentially more polluting fuels in the future (ammonia co-firing / RDFs). In the meantime, these plants will continue to generate profits for their shareholders, while local communities and workers remain exposed to harmful emissions. Noting also that the owners of these plants are coal expansionists.
Amidst the welcome changes, ADB still failed to ensure its Paris Alignment goals with its carbon-intensive portfolio. The lenient policy on fossil gas is deeply rooted in its perceived role as a “transition fuel”. Despite this obsolete assumption, ADB retained fossil gas as part of its decarbonization efforts, often in tandem with carbon offset schemes such as using carbon capture utilization storage (CCUS).
Moreover, pivot on false climate solutions is the hasty preference of ADB, situating its partner countries to dangerous detours and immense carbon lock-in by keeping fossil fuel industries technically untouched. As mentioned, CCUS completely distracts industries from fully phasing out fossil fuel technologies, not to mention its unproven effectiveness from years of piloting. Fuel mixing, including green hydrogen, has been a fad among banks and investors, notwithstanding the need for the extraction of critical minerals to mechanize these technologies. Further, Waste-to-Energy (WTE) and Refuse-Derived Fuels (RDFs) are adversely detached from their decarbonization goals as they encourage unsustainable production of waste and are toxic to human health.
Large hydropower is one of the biggest power generation projects of ADB, with a total of 6,212 MW. Despite the current hesitation expressed by the ADB Energy Department on hydropower projects, the Bank still failed to account for the serious risks involved in dam construction, including threats to structural safety and the negative effects on communities that have experienced dam failures, forced displacement by authorities, and the loss of their ancestral lands and livelihoods.
On top of these compelling issues, the Bank has failed to systematically account for the greenhouse gas emissions of its financed projects. ADB has also been slow to respond to past harms caused by fossil fuel financing, such as its involvement in coal projects like the Jamshoro Coal Plant.
Asian Infrastructure Investment Bank’s Corporate Agenda for Climate
In the case of the AIIB, it had the opportunity to align its operations with the Paris Agreement when it opened in 2016. However, the Bank failed to chart that path and instead, its investment portfolio has predominantly focused not on clean and green projects, but particularly on fossil fuels.
Like ADB, AIIB has released its 2022 Energy Sector Strategy (ESS), which also banned thermal coal mining, coal-fired power, and heating plants, or any projects related to coal (including the associated facilities). While this gap has been closed, it must not be forgotten that the Bank had once funneled its funds to the coal industry via Financial Intermediaries[vii] — a grave precedent that AIIB must not risk repeating.
AIIB has also been constantly violating its own Paris Alignment methodology, accruing from its massive investments on fossil fuels. Further, a large portion of its capital market investments have gone into fossil fuel projects. A recent study revealed that 62% of the capital market investments have been channeled to fossil fuel projects, totaling USD 321. 41 Million. If private capital investment is included in the computation, it even swells to USD 1.82 Billion[viii].
As young as it is, AIIB’s investments have been heavily skewed toward fossil gas and fossil fuel-reliant projects. The Bank is not an outlier in terms of relying on it as ‘transition fuel’. As of 2024, there are a total of eight (8) fossil gas and combined gas facilities approved. The cumulative capacity of AIIB’s gas portfolio accounts for 4,094 MW in the energy mix with a total investment of USD 765 million. Notably, South and Southeast Asia became dumping grounds for ADB’s fossil gas and fossil fuel investments, therefore locking populations across the region into dependency on expensive, carbon-intensive energy.
Another bulk of energy financing and part of its climate resilience efforts is the hydropower investments. Accordingly, a total of USD 1.134 Billion or 10.2% of its energy subsector is accounted for by large hydro. As a reiteration, the development of these projects entails a history and bad precedents of land dispossession, destruction of riparian ecosystems, and wrought havoc on free-flowing rivers. Apart from this, the construction of the dam and over its entire lifecycle produce high levels of GHG emissions, most especially in the first 10-20 years of operation due to methane pulses. The AIIB, in several submissions by different CSOs, is made aware of the impacts of dams built on cross-border waters. Specifically, the Bank has been called out for airing its support for the Rogun Hydropower Development Project in Tajikistan[ix], given the complexities of its transboundary concerns, including the magnitude of resettlement issues with minimum human rights standards, impending water crisis, and economic distress.
From these premises, AIIB is an explicit fossil fuel bank, with these operations and schemes that signify a grave disconnect on achieving a “green and sustainable” agenda.
In summary, there are faster, fairer ways to phase out coal in a manner that helps keep global temperature rise within 1.5°C. In this year’s COP, the Bank will boast its achievements and new commitments, but we know that it will be pure lip service. Without new efforts to avoid carbon lock-in and veer away from techno-fixes, this will continue to give more harm than good to people and the environment.
The debacle on MDBs Just Transition in Language and in Practice
At the height of COP26, the same group of MDBs also came up with a joint commitment to a just transition – the High-Level Principles on Just Transition. Although it was not explicitly defined in the purview of the Banks, they agreed to set upon commitments to reduce GHG emissions and aid in climate resilience strategies.
Both ADB and AIIB have pledged support for a just transition to address the socio-economic impacts of climate change, but their policies often lack holistic, community-centered approaches. Across Asia, where the bulk of energy infrastructures were built, cases of human rights violations, social and environmental impacts, and biodiversity loss and disruption have been recorded. These Banks miserably failed to create an inclusive space and transparency for the project-affected people by deliberately railroading the consultation process and outright neglecting due diligence on information disclosures. This corporate-centric approach often ignores broader issues on environmental justice, human rights, gender equality, and reparations.
Further, MDBs continue to exacerbate debt distress in low-income countries through their financing schemes, particularly when these loans support environmentally harmful projects or contribute to lock-in carbon-intensive investments that hinder long-term climate resilience.
It is indeed alarming that these corporate giants are using their financial leverage to tweak the discourses on this process; making it a fad among themselves and simply setting the rules, principles, trajectories, and even co-opting the language of the transformative process that the communities and the broad alliance of sectors have collectively envisioned. This alone undermines the principles of a just and equitable transition of the energy systems, detaching them from the hands of the public and excluding them from all phases of development.
Key Calls and Demands of Civil Society in COP29
Given the insufficient and incoherent climate finance delivery, the political limitations of COP negotiations, and the inadequate performance of MDBs in aligning their operations with the goals of the Paris Agreement, urgent reforms are needed in both the governance and operations of MDBs. From these premises, the NGO Forum on ADB and its networks submits its calls and demands in time for this year’s COP:
1. Climate finance should be given as reparations, not as loans or other profit-driven modalities.
At the core of climate justice comes the acknowledgment of the historical responsibility of the Global North countries as principal emitters globally. Climate debt must be accounted for in the form of reparations — compensation for causing adverse climate impacts to the Global South.
In the current state of climate finance, the ADB the AIIB, and other financial institutions are immensely utilizing climate finance in the form of loans or issuing of bonds, pushing their developing member countries (DMCs) at the edge of a deeper socio-economic and ecological crisis. Financing climate solutions at this venture will further burden the developing countries into servicing their debts at a time when allocations for public finance are necessary for their national priorities. The new climate finance target at COP29 must therefore bolster commitments on providing grants and equal support for mitigation and adaptation, not loans and other profit-driven agendas.
2. Uphold greater transparency on information disclosures across all MDB operations having impacts on climate
CSOs have been continuously advocating for more transparent and genuine participatory processes across MDB operations. Over the past years of engagements, these Banks have been notorious for excluding CSOs and community representatives during project-related dialogue and consultations. A stark example would be the ETM Pilot in Indonesia wherein negotiations already happened between the ADB and the national government, the national power utility company, and the plant operator, without the presence of the workforce and adjacent communities. Similarly, in many cases where information was requested, Banks would tenaciously shield it with non-disclosure agreements.
ADB and AIIB, along with other MDBs, must uphold higher standards of transparency by requiring project implementers to provide full public disclosure of information on the projects concerning affecting communities and their representatives.
3. Banks must close all gaps in coal and gas policies; and ensure a definitive timeline for their phaseout
As previously laid down, all MDBs must consistently uphold their commitments to the Paris Agreement. The loopholes in the coal ban and the retention of fossil gas in their investment portfolios will further exacerbate the impacts of the climate crisis if not addressed immediately. MDBs should establish a clear and binding timeline for phasing out fossil fuel projects and any other mechanisms that support them.
4. Stop supporting false and techno-fixes: CCUS, Large Hydropower, Waste-to-Energy, Hydrogen, Ammonia Co-firing and other fuel mixing, and geothermal extraction
These false solutions in the guise of ‘low carbon technologies’ present more harm than good as they will only prolong the last lifeline of fossil fuels. These techno-fixes, in turn, perpetuate more environmental and social risks, without providing long-term, sustainable solutions. Impacts of large-scale renewable energy projects (such as solar and wind) should not also be overlooked, especially on toggling safeguards issues involving local communities, land and Indigenous Peoples’ rights, and environmental harms. True climate solutions require a shift away from these techno-fixes and cast full attention to equitable and community-centered systems that prioritize social justice and environmental sustainability.
5. Just Transition Framework must not only be concentrated on the energy sector, but it must also account for basic human rights, environmental protection, labor rights, and gender issues
Just Transition is more than the shift of energy systems but also encompasses overarching social, environmental, and human rights concerns. Narrow and business-centered conceptions of Just Transition among these financial institutions promote greenwashing and are used to ‘clean their hands’ of making climate change a business opportunity. With this, these Banks must rethink their concepts of Just Transition by taking a holistic approach concerning long-established international standards, conventions, and principles, especially on their country-specific Just Transition Frameworks. For one, CSOs incessantly advocated for the inclusion of the ‘Polluters Pay’ principle over these frameworks to imbibe a greater form of accountability and justice for the cost of this climate crisis.
6. All IFIs must take accountability for the past and present harms brought by fossil fuel project financing
This includes addressing the environmental and social damage, bringing in concrete reparation plans for communities, and ensuring that future projects adhere to strict environmental and social safeguards. With the financed projects and supported policies of IFIs, they must ensure that accountability is cascaded down to the project proponents—whether corporations or governments— and must be held responsible for the harm they cause. As reiteration, the Banks must stop financing fossil fuel projects in all forms, divest from existing ones, and take proactive steps to address their culpability to the people and the planet.
At COP29, there is an opportunity to push for stronger climate finance commitments, genuine adherence to the principles of Paris alignment, and more robust accountability for past harms. These actions are crucial if we are to meet the 1.5°C target and ensure a just and sustainable future for all.
NGO Forum on ADB Network
Endorsed by the following organizations:
350 Pilipinas, Philippines
350.org Asia, Asia
AbibiNsroma Foundation, Ghana
Adarsha Samajik Progoti Sangstha, Bangladesh
Alternative Law Collective (ALC), Pakistan
Bangladesh Working Group on External Debt (BWGED), Bangladesh
BRICS Feminist Watch, Global
Buliisa Initiative for Rural Development Organisation (BIRUDO), Uganda
Campaign for Sustainable Rural Livelihoods (CSRL), Bangladesh
Center for Energy, Ecology, and Development (CEED)
Centre for Human Rights and Development (CHRD), Mongolia
Centre for Research and Advocacy, Manipur, Manipur, India
CEPR - Centre for Environment and Participatory Research, Bangladesh
Co-ordination Office of the Austrian Bishop's Conference for International Development and Mission (KOO), Austria
Coastal Livelihood and Environmental Action Network (CLEAN), Bangladesh
EcoWaste Coalition, Philippines
Environmental Public Society, Armenia
Equitable Cambodia, Cambodia
Fresh Eyes, United Kingdom
Friends of the Earth Japan, Japan
Gender Action, USA
Global Alliance for Incinerator Alternatives (GAIA), Asia-Pacific
Global Responsibility (Austria)
Growthwatch, India
Indian Social Action Forum (INSAF), India
Indigenous Women Legal Awareness Group (INWOLAG), NEPAL
Indus Consortium, Pakistan
Initiative for Right View (IRV), Bangladesh
Insituto Maíra, Brazil
International Accountability Project, Global
International Rivers, (International/Global)
Jamaa Resource Initiatives, Kenya
Jubilee Australia Research Centre, Australia
Kazakhstan International Bureau for Human Rights, Kazakhstan
Kilusan para sa Repormang Agraryo at Katarungang Panlipunan (KATARUNGAN), Philippines
KRuHA - people's coalition for the right to water, Indonesia
Latinoamérica Sustentable, Latin America
Legal Rights and Natural Resources Center-Friends of the Earth Philippines, Philippines
Life Haven Center for Independent Living, Philippines
Lumière Synergie pour le Développement, Senegal
Mangrove Action Project, USA
MATI SAFE FOOD, Bangladesh
Mekong Watch, Japan
Nadi Ghati Morcha - India, India
Nash Vek, Kyrgyzstan
NGO Forum on ADB, Bangladesh
Oil Workers' Rights Protection Organization Public Union, Azerbaijan,
Onnochitra Foundation, Bangladesh
Oyu Tolgoi Watch, Mongolia
Participatory Research & Action Network - PRAAN, Bangladesh
Peace Point Development Foundation (PPDF), Nigeria
Philippine Movement for Climate Justice, Philippines
Prakriti Ecological Agri-Entreprise, Bangladesh
Public Services International, Asia Pacific
Recourse, The Netherlands
Rivers without Boundaries Coalition, Mongolia
Rivers without Boundaries International Coalition, International
Society of Development and Education for Small Households-SoDESH, Bangladesh
SONGSHOPTAQUE, Bangladesh
Urgewald, Germany
WomanHealth Philippines, Philippines
Youth for Green Communities (YGC), Uganda
[i] Copernicus Climate Change Service. (2024). June 2024 Marks the 12th Month of Global Temperatures at 1.5*C above pre-industrial levels. https://climate.copernicus.eu/june-2024-marks-12th-month-global-temperatures-15degc-above-pre-industrial-levels
[ii] Climate Policy Initiative. (2023). Global Landscape of Climate Finance 2023. https://www.climatepolicyinitiative.org/publication/global-landscape-of-climate-finance-2023/#:~:text=Global%20 climate%20finance%20 approached%20 USD,653%20billion%20in%202019%2F2020.
[iii] Joint MDB is composed of the African Development Bank (AfDB), the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB), the Council of Europe Development Bank (CEB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Inter-American Development Bank Group (IDBG), the Islamic Development Bank (IsDB), the New Development Bank (NDB) and the World Bank Group (WBG).
[iv]Asian Development Bank. (2024). Beyond the Quantum: The Role of MDBs in Shifting Climate Finance Paradigms.
[v] Asian Development Bank. (n.d.). Climate, Energy, and Sustainability: Asia and the Pacific’s Climate Bank. https://www.adb.org/climatebank
[vi] Bulk of the finance comes in the form of loans (95.5%); only 3.1% was tendered for grants and 1% was for technical assistance.
[vii]Recourse, TrendAsia, and Inclusive Development International. (2024). Coal for Climate? How Multilateral Development Banks risk financing captive coal expansion. https://www.inclusivedevelopment.net/wp-content/uploads/2024/07/Coal-for-Climate-Report.pdf
[viii] Urgewald. (2024).Infrastructure for Yesterday: The AIIB’s Capital Market Operations Include Major Fossil Fuel Investments. https://www.urgewald.org/sites/default/files/media-files/urgewald_Paper_AIIB_Capital_Market_Operations.pdf
[ix]See project document here: https://www.aiib.org/en/projects/details/2024/proposed/Tajikistan-Rogun-Hydropower-Development-Project-Phase-1.html
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