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Long-term strategies: a tool for public development banks

#Foreword

Public development banks are major players in financing the climate transition and, since the Paris Agreement, are called upon to go even further and ensure that all of their activities are aligned with the dual objective of carbon neutrality and climate resilience. In order to assess and prioritize their investments, they need to have a clear vision of the transition pathways of the countries in which they operate. They must adapt to the specific contexts of each country, and cannot rely on global scenarios to do so.

The good news is that they can rely on countries' "long-term strategies." Following the Paris Agreement, all countries were invited to develop such strategies in order to identify priority sectors and technologies and the policies and measures to be put in place, sector by sector, to drive their transition. They give a clear picture, for example, of the energy mix chosen for 2050. In the UK, the Net Zero Strategy is the long-term strategy. 50 countries around the world have developed their strategies, and their number is expected to continue to grow ahead of COP27.

The bad news is that too few public development banks currently make full use of these strategies to assess and guide their investments. This is why I4CE issues a study today that shows the potential of long-term strategies for these banks... and the current challenges for their full use. We also identify several ways to increase their usefulness, and invite you to discover them in this newsletter. Enjoy your reading!

#I4CE_Report

Long-term strategy use for Paris-aligned investments
This I4CE report focuses on the role of countries’ Long-Term Strategies (LTSs) in the Paris alignment approaches of Development Finance Institutions. It explores the possible roles of both the LTS development process and the resulting LTS document in providing insights on the Paris alignment of investments within investment decision-making processes. The findings are relevant for a broader range of financial institutions.

#2minOn

Video: 2 minutes on #DevelopmentBanks
What are long-term strategies? How can they contribute to aligning with the Paris Agreement? And how can they be useful for public development banks? Sarah Bendahou of I4CE answers these questions in 2 minutes.

#FromThePast

Report: Operationalization Framework on Aligning with the Paris Agreement
NewClimate Institute and I4CE have developed a "toolbox" to assist the International Development Finance Club and all financial institutions in their alignment journey. There is no single tool or methodology that will enable institutions to align with the goals of the Paris Agreement: a combination of tools will be needed.

Blogpost: Aligning the entire Financial Chain
In this post, Ian Cochran, Senior Advisor at I4CE explains why financial institutions need to go beyond aligning their own portfolio and look at the whole financial chain. He also looks at the launch of the "Financial Institutions Group", made up of institutions that want to assess and support the alignment of the financial chain with climate goals.

#I4CE_Project

Develpment banks: alignment of their financial counterparties
We invite you to discover a new I4CE project that aims to help development banks who wish to assist their financial intermediaries to align. A guide for public banks will be published at COP 27.

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