Development banks make landmark climate pledge, but no fossil fuel phase out

The world’s public development banks on Wednesday pledged to align their financial firepower with the Paris Agreement on climate change, but avoided a firm commitment to phase out fossil fuel financing.

As a source of funding for many large infrastructure projects, including in the energy sector, public development institutions are key to efforts to steer finance away from fossil fuels and into low-carbon projects.

Together, such institutions invest around $2.3 trillion (£1.7 trillion) each year - equivalent to 10% of all global investments from public and private sources.

At a green finance summit organised by the French government, the world’s 450 public development banks said they would “increase the pace and coverage” of investment in renewable energy, energy efficiency and clean technologies.

However, the group stopped short of pledging to phase out fossil fuel investments, a step announced last week by a smaller group of European development banks, while the Asian Development Bank (ADB) refrained from signing the declaration.

The group said it would work towards adopting a tougher stance on the narrower issue of investment in coal - responsible for a large share of the world’s carbon emissions - in time for the next round of global climate talks in Scotland in 2021.

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