Building an Evidence Base on Private Sector Engagement in Financing Climate Change Adaptation

This report documents and draws lessons from multilateral development bank (MDB) activity on private sector adaptation to strengthen the evidence base in this so far under-researched area. The private sector is key to addressing the challenge of adaptation to climate change. This is widely recognised and the major climate finance mechanisms such as the Climate Investment Funds (CIF) and Green Climate Fund (GCF) are developing private sector adaptation programmes. However, the factual evidence on which the debate draws, and on which the design of these new programmes is based, is very weak. The purpose of this report is to strengthen this evidence base.

Key findings of the report are:

  • MDB private sector adaptation finance in 2013–14 equalled US$270 million, which made a total of $1.5 billion of MDB investment more climate-resilient
  • private sector adaptation finance is highly leveraged: the total project value of these MDB investments with adaptation components was $5.5 billion
  • infrastructure, water and agribusiness projects dominate the portfolio, which is broadly consistent with known adaptation priorities
  • over 80 per cent of MDB private sector adaptation finance was delivered in middle-income countries
  • donor co-financing has played a modest role to date, but may provide an opportunity for the expansion of MDB private sector adaptation financing activities
  • technical assistance is an important facilitator of private sector adaptation finance: it provides evidence on the materiality of adaptation to clients’ investment
  • MDBs can improve their origination effectiveness, for example by continuing to mainstream climate change across banking teams and monitor adaptation finance

Client
European Bank for Reconstruction and Development (EBRD)
Practice areas