Key role for multilateral development banks at COP29 and the G20 summit: 
Reaction from Recourse and partners

The recent UN climate summit, COP29 in Azerbaijan, reaffirmed the role of multilateral development banks (MDBs) in providing finance dedicated to tackling climate change. At the G20 summit in Brazil, leaders from the world’s wealthiest nations moved ahead on plans for MDB reform, but remained silent on debt reform.

Recourse staff and partners joined civil society groups at both events, to push for a more ambitious, truly rights-based approach to climate finance, debt relief and the just energy transition. Here, we report back on our activities and the outcomes of these key summits for people and the planet.

Challenging the role of multilateral development banks at COP29 and calling for ambitious, debt-free public climate finance

Going into this “finance COP”, the Recourse team with partners from SYND (Ghana) and Trend Asia (Indonesia) were focused on raising concerns over the rising role of the MDBs in the delivery of climate finance, and joining civil society calls for trillions of grant-based, public finance to flow from rich developed countries to developing countries to tackle climate change.

Our new report, launched during COP29 and supported by 18 civil society organisations and networks, exposed a worrying lack of accountability and transparency in MDB climate finance. Taking a closer look at the banks’ self-proclaimed “record” figure of $125 billion in 2023, we saw money missing the most climate-vulnerable regions, supporting fossil fuels and other problematic projects, and adding to debt distress in many countries.

“The development banks’ climate finance figures should be read with great caution. We found financing for projects involving fossil fuels, human rights violations, and environmental destruction. This raises serious questions about whether the MDBs’ current approach is genuinely helping to address climate change for the most vulnerable people and places.” – report author Petra Kjell Wright

At the summit, we watched every move of the MDBs as they made their bid to manage an increasing portion of climate finance, attending discussions and events at their pavilions, asking critical questions and responding publicly through social media or the daily civil society newsletter, ECO.

“They say our billions will leverage private trillions. But ECO asks what these trillions will be for, other than profits and adding to shareholder value? The MDBs are looking increasingly like investment bankers, not climate bankers.” – ECO edition five

The private sector first approach so clearly favoured by the MDBs was met by the Banking on Renewables campaign, which lays out key criteria for public climate finance going to a just transition to 100% renewable energy systems that truly power people and protect the planet. Delegates and observers were invited to engage in discussions about energy transition at a booth, co-hosted with Big Shift Global and Climate Action Network International, and at a side event with Germanwatch, GFLAC, Big Shift Global, SYND, Power Shift Africa, and Avinash Persaud of the Inter-America Development Bank (and the Bridgetown Initiative).

Event about just energy transition and multilateral development banks at COP29. Photo by Power Shift Africa.

New climate finance goal and carbon markets agreed at COP29

As the outcome of COP29 emerged two days late in the small hours of Sunday 24 November, it was clear that the call for trillions of dollars in grants was not to be agreed on. Far from this, an inadequate goal of just $300 billion by 2035 was pushed through by the Azeri presidency, this sum not to come in grants from developed to developing nations but from multiple sources including a substantial role for the MDBs and the private sector. The outcome was labelled “a staggering betrayal of the world’s most vulnerable” by the Least Developed Countries group. It included a vision for mobilising $1.3 trillion by 2035, with a dialogue on this to start at COP30 in Belem, Brazil, next year, so the negotiations are far from over.

“The increased dependence on MDBs to deliver climate finance is a diversion that will enable private sector profit-making out of the climate crisis and allow developed countries to dodge accountability. …This outcome is set to take climate finance even further away from the people who need it the most.” – Alison Doig

A decision on an international carbon market under Article 6.2 of the Paris Agreement was also finally agreed in Azerbaijan, raising concern for rubber stamping of ‘carbon cowboys’ activities. The World Bank Group’s insurance arm, MIGA, also presented a new tool designed to ‘rescue’ failing voluntary (i.e. private sector) carbon markets: a Letter of Authorisation (LoA) to offer guarantees which protect carbon offset developers from political risks.

“The World Bank Group is yet again contributing to prolonging the fossil fuel era, albeit indirectly, by helping big polluters get a free pass to continue their dirty business. Instead of backing unproven and ineffective voluntary carbon markets, MIGA should be prioritising guarantees for just, clean energy transition projects in the most climate-vulnerable countries, in line with the World Bank Group’s public commitment to the Paris Agreement.” – Marjorie Pamintuan

Debt and development on the G20 agenda

The MDBs are also increasingly engaged in the G20, a forum of the most wealthy and high-emitting countries that wields significant power over decisions and action (or inaction) on the climate. Recourse joined pre-summits for civil society (C20) and think tanks (T20) as well as the official Social Summit for the first time, to investigate how Brazil’s high-level championing of a climate agenda and “anti-racist” economy manifested in the discussions and assess the scope for meaningful policy change and mobilisation to influence the G20.

Yet, regardless of recommendations from the C20 and T20, and civil society raising the alarm for over a year already, the unaddressed elephant in the policymakers’ room remained debt. The Brazilian Presidency was silent on debt architecture reform – the ineffective Common Framework remained untouched and the role of the International Monetary Fund (IMF) never questioned. Recourse itself hosted an event at the Social Summit with partners Latindadd, BRICS Policy Center, Institute For Economic Justice, and Gestos, exploring how to break the chains of debt in the Global South.

Our recent research revealed that the IMF is still advising damaging austerity and continued fossil fuel production – at odds with countries’ climate and human rights obligations, and in spite of the Fund’s promises of climate action. IMF conditionalities and crippling debt are thus preventing many indebted countries from pursuing cleaner, greener development pathways.

Event about multilateral development banks at the G20 Social Summit. Photo by Federico Sibaja.

G20 Leaders’ Declaration confirms MDB private sector first approach

In terms of international architecture reform, the main focus of the G20 Leaders’ Declaration was on MDBs, with very little on the IMF or World Trade Organisation (WTO). It echoed the “triple agenda” led by the G20 for “better, bolder and bigger” MDBs, including endorsement of a new Roadmap to 2030 published earlier in October. The overall approach of the roadmap remains a business-as-usual focus on de-risking and blended finance, perpetuating dependency on market forces and short-term profiteering over long-term sustainability, while lacking a human rights lens and accountability to communities – something civil society already called out in the development of the World Bank’s Evolution Roadmap, which the G20 “welcomed” regardless.

“G20 countries have the power to move the direction of the world economy to benefit all people and protect the planet. However, the momentum around international financial architecture reform has been misused. At the Brazil summit, the wealthiest country leaders made no recognition of systemic factors behind the debt crisis. The only solution proposed is to increase financing from multilateral development banks, despite their current lack of accountability and continued support for fossil fuels.” – Federico Sibaja

The Brazilian Presidency made efforts to centre climate by setting up a dedicated taskforce, TF Clima. However, its ambition was watered down in the final outcome, which had deliberately vague and non-committal language, and in which any assertions on the G20’s responsibility for action to remedy the climate emergency they caused had been edited out. Ambitious recommendations from independent experts around increasing fiscal space, the limitations of the private-first approach, and the need for a new role for financial regulators, were also ignored. Instead, the Leaders’ Declaration only highlighted the taskforce’s work to address barriers to ‘foster private capital flows’, doubling down on the ‘private sector first’ framing of the overall MDB reform roadmap.

“The G20 leaders made ambitious statements in Brazil about inequality and a just transition that ‘leaves no one behind’, but when it comes to translating these commitments into actual policies and action, everything becomes vague, voluntary, and watered down. Even the language on a wealth tax has lost all specifics, and the disgraceful behavior of rich G20 countries’ delegations at the COP29 in the meantime makes their ‘just transition’ commitments ring hollow.” – Friederike Strub

Looking ahead

What stands out from the COP29 and G20 summits is the central role put on the international financial institutions (IFIs) to lead and deliver a private-sector led approach to development financing, including on climate finance. This is a major distraction from calls for urgently needed debt relief and grant based public finance to deal with the climate crisis. While both COP29 and G20 call for reform of the IFIs, evidence to date shows that this has primarily focused on speeding up processes and increasing risks, while eroding accountability for harms caused.

There is therefore an increased need to scrutinise the MDBs’ role in climate finance, and call for genuine reform of the international financial architecture, including the IMF. We stand together with partners and civil society networks around the world to call for a just transition to a climate safe world.

Through our work with partners we find hope at every level – from the global and regional coalitions fighting for climate justice, to local organisations working to get energy access to those who need it most. We will continue to strive together for better use of public climate finance for climate, for people and for the planet.

A snap from the booth at COP29, where visitors were asked to share what a just transition means to them. Photo by Big Shift Global.

Main photo of an activist at COP29, by David Tong/Oil Change International.