07 December 2015

Financial Institutions Mainstream Climate Action

PARIS, FRANCE — A coalition of the world’s leading financial institutions have today officially signed on to five voluntary Principles to Mainstream Climate Action into their operations.

The landmark move was undertaken by 26 financial institutions, from both the public and private sectors, from developing and developed countries. By signing onto the voluntary principles, the financial institutions (which together are worth a total value of more than $11 trillion) are pledging to continue to integrate climate considerations into their investments and advisory functions, in an effort to scale up their efforts to address climate change, thereby “greening” operations over time. 

The principles highlight practical, operational approaches to integrate climate into the core investments and advisory functions of a financial institution. They outline how financial institutions can:

• Commit to climate strategies,
• Manage climate risks,
• Promote climate smart objectives,
• Improve climate performance, and
• Account for climate action.

These principles have been developed based on practices implemented by financial institutions worldwide over the last two decades. A related publication also released today compiles emerging practices illustrating some of the many ways financial institutions currently integrate climate change considerations into their core activities.  

The Asian Development Bank’s (ADB) work is detailed in two case studies within the document. These outline ADB's long-standing efforts to make addressing climate change a core part of its operations and ADB's requirement, as of March 2014, to integrate climate resilience into its projects.

“With Asia and the Pacific one of the most vulnerable regions to climate change, ADB now screens all its projects for climate risks. Moreover, by 2016, it is targeting 45% of all operations to address climate change,” said Bambang Susantono, ADB Vice-President for Knowledge Management and Sustainable Development.

 In 2014, 44% of ADB’s project portfolio operations had climate-related components.

The five voluntary Principles to Mainstream Climate Action within Financial Institutions were initially developed by a group of multilateral development banks (MDBs) and several members of the International Development Finance Club (IDFC), a network of national, regional and international development banks. This group was soon joined by several other public and private financial institutions worldwide.

Other institutions are being invited to take part in this initiative, as part of a collective responsibility to incorporate climate change considerations throughout their operations. 

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.

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© Asian Development Bank