At the COP29 climate summit in Azerbaijan on Tuesday, November 12, the world’s largest multilateral development banks (MDBs) announced a landmark commitment to combat climate change. The institutions pledged to increase climate finance for low- and middle-income countries to $120 billion annually by 2030, a substantial rise from $75 billion in 2023 and $60.9 billion in 2022.
This ambitious target is designed to assist developing nations in mitigating the effects of global warming and adapting to increasingly severe climate impacts. Of the total, $42 billion will be dedicated to adaptation measures aimed at bolstering resilience to extreme weather events and rising temperatures.
A Pivotal Moment in Climate Finance
The MDBs’ pledge underscores their commitment to the Paris Agreement’s goal of limiting global temperature rise to 1.5°C above pre-industrial levels by mid-century. However, they acknowledged the mounting challenges of a shifting geopolitical landscape.
The recent election of Donald Trump in the United States, who has signaled a retreat from international climate commitments, alongside cuts in development aid from other nations, has heightened concerns about a growing funding shortfall. In response, the MDBs are calling for greater private sector involvement, aiming to mobilize an additional $65 billion in investment from private financiers.
“While the scale of MDBs’ financial commitments is essential, our most significant impact comes from driving transformative change,” the group said in a joint statement.
Unlocking Resources Amid Growing Demands
The MDB coalition, comprising key institutions such as the World Bank, European Investment Bank, and Asian Development Bank, stressed that realizing their ambitious target will depend on the resolve of their shareholders — both developed and developing countries.
The group outlined several priorities for scaling up their financial impact, including expanding internal resources, securing a larger pool of grants and concessional funding, and increasing their capital base to unlock additional financing. These measures, they noted, are crucial to supporting enhanced policy dialogue, funding public goods, and mobilizing private capital.
“Provision of climate finance at scale also depends on increased MDB internal resources; a larger pool of grant and concessional funds to support enhanced policy dialogue, finance public goods, and mobilize private finance,” the statement read.
Urgent Call for Global Collaboration
The MDBs’ announcement comes as calls grow louder for wealthier nations to fulfill their financial obligations to vulnerable countries. With time running out to avert the worst effects of climate change, the MDBs urged all member nations to show greater ambition in meeting the escalating financial demands of climate-vulnerable regions.
“The need for concerted global action has never been more urgent,” the group emphasized.
This historic pledge at COP29 places the MDBs at the forefront of the global fight against climate change, setting a high bar for international cooperation and financial innovation in addressing one of humanity’s most pressing challenges.