Adaptation Finance: Lessons and way forward for the International Development Finance Club

Through the combined assets and commitments of its membership, the International Development Finance Club (IDFC) represents the largest provider of climate finance globally with total commitments of over USD $1 trillion in green finance between 2015 and 2020. In 2021, IDFC members committed USD $224 billion to green finance investment around the globe, of which USD $212.7 billion was dedicated to climate finance. 

The Green Climate Fund (GCF) is the world’s largest dedicated climate fund, mandated to foster a paradigm shift towards low emission, climate resilient development pathways in developing countries. To achieve its mandate, the GCF supports developing countries’ efforts to create low emission and climate-resilient markets by fostering long-term climate planning, policy integration between climate action and sustainable development, innovation and de-risking pioneer investments. 

The IDFC and the GCF have agreed to collaborate and explore avenues to scale up finance towards climate adaptation. The GCF has accredited 35 Public Development Banks (PDBs)i , 15 of which are IDFC membersii, making the IDFC the largest group of financial institutions collaborating with the GCF, and making IDFC members key partners in achieving global climate finance goals. To date, IDFC members have 25 approved Funding Proposals with USD $1.75 billion committed from the GCF and a total project value of USD $5.3 billion. This includes a total of 16 approved adaptation Funding Proposals in partnership with 7 different IDFC members, with USD $989 million committed from the GCF and USD $1.05 billion in co-financing, for a total value of USD $2.04 billion. 

This report outlines the progress made by the IDFC in financing adaptation investments, highlighting the imperatives for adaptation based on the most recent climate science and the current gap in global finance for adaptation. It also highlights the accomplishments of the IDFC in financing adaptation initiatives since 2015, including through the support of the GCF. Acknowledging that global demand for adaptation finance still vastly exceeds supply, the report outlines the strategic role that IDFC members can play in financing adaptation, while showcasing a variety of different adaptation financing solutions that have been deployed by IDFC members using a wide range of financial instruments. The report concludes with a look to the future on how the IDFC can scale-up adaptation finance to help address current gaps in adaptation investments.