Developing Common Principles for Tracking Climate Finance
World Bank
April 3, 2015
The world’s largest development finance institutions are working together on a common sets of principles for tracking climate finance. They have agreed on the first set for tracking mitigation finance. Similar principles for tracking adaptation finance and leverage are being developed this year.

A key step to reining in climate change is shifting how trillions of dollars are invested, moving finance out of carbon-intensive, business-as-usual investments that can lock in greenhouse gas emissions for decades to come and moving it into low-carbon growth.

Knowing where the money is flowing is critical for reaching areas of opportunity and need, because what gets measured gets managed.
This week, more than two dozen of the world’s largest development finance institutions – including multilateral development banks like the World Bank Group and regional and national development banks like Agence Française de Développment – agreed to a common set of principles that each will use to consistently track financial commitments that help reduce the drivers of climate change.
Tracking climate mitigation finance is the first step. The group is also developing principles for tracking adaptation finance and the ability to leverage finance, with frameworks possible mid-year.
“Common methodologies will build trust that climate finance is flowing,” said World Bank Group Vice President and Special Envoy for Climate Change Rachel Kyte. “Our ability as multilateral, national and bilateral development institutions to tell a shared story will provide an essential piece of the climate finance jigsaw puzzle. That puzzle needs to be solved in the next few weeks. It’s important for the climate conference in Paris, of course, but for Addis Ababa and finance for development, as well.”

Common principles for tracking
The development finance institutions have been tracking climate finance for only a few years, and their methods have varied, making global public finance numbers difficult to compare. Some methods left out segments; others led to double counting of resources.

To help create a more accurate map of climate finance flows and assessment of the volume, the multilateral development banks (MBDs) began jointly reporting on climate finance about four years ago and have been fine-tuning their harmonized framework. Together, the African Development Bank (AfDB), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), Inter-American Development Bank (IDB), and the World Bank Group (WBG) reported nearly US$75 billion in climate finance in fiscal years 2011 to 2013.

Separately, the International Development Finance Club (IDFC) developed a process for its 22 national, regional and international development finance institutions, which include Development Bank of Latin America (CAF), Japan International Cooperation Agency (JICA) and Germany’s KfW. Together, the IDFC members reported US$87 billion in climate finance in 2013.

Over the past year, these two groups have worked together to develop the principles, guidelines and definitions in the Common Principles for Climate Mitigation Finance Tracking that were agreed to at the Climate Finance Forum in Paris this week.

The principles
The principles set common definitions and guidelines for tracking climate finance, but they leave the implementation, reporting, and quality control to each institution.
An activity is classified as related to climate change mitigation under the common principles if it promotes “efforts to reduce or limit greenhouse gas emissions or enhance greenhouse gas sequestration.”

The guidelines then list activities that can be counted as climate finance in nine categories: renewable energy; lower-carbon and efficient energy generation; energy efficiency; agriculture, forestry and land-use; water and wastewater; transportation; low-carbon technologies; non-energy greenhouse gas reductions such cleaner industrial production and carbon capture and storage; and cross-cutting issues such as support for the development of carbon markets, policies and regulations, and emissions monitoring systems…

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Common Principles for Climate Mitigation Finance Tracking – 7 pages
Pdf: http://www.worldbank.org/content/dam/Worldbank/document/Climate/common-principles-for-climate-mitigation-finance-tracking.pdf
Introduction
The purpose of these Common Principles for Climate Mitigation Finance Tracking (or the Principles) is to set out agreed climate change mitigation finance tracking principles for development finance. The Principles have been developed by the joint climate finance group of multilateral development banks (MDBs)1 and the International Development Finance Club (IDFC)2 based on their experience on the topic and with the intention to be shared with other institutions that are looking for common approaches for tracking and reporting. The principles consist of a set of common Definitions and Guidelines including the list of activities, but do not cover aspects related to their implementation, including quality control procedures which remain the sole responsibility of each institution and/or group. The Principles, reflect the approach that both groups (MDBs and IDFC) have been following for tracking climate change mitigation activities for the past 4 years, and are based on the application of harmonized terms.