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Climate Change Action Plan

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Climate Change Action Plan 2020–2025CLIMAT E AC T IO N P January 2020 L A N About the Islamic Development Bank The Islamic Development Bank (IsDB) is a multilateral development financing institution, established in 1975, that aims to foster the economic development and social progress of its 57 member countries and Muslim communities in non-member countries in accordance with the principles of the Shari’a (Islamic law). Its mission is to promote comprehensive human development, with a focus on the priority areas of alleviating poverty, improving health, promoting education, improving governance and prospering the people. Disclaimer This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without authorization of IsDB. The content including boundaries shown on any map, colours, denominations and other information used in this report do not imply any judgement or views on the part of IsDB nor its member countries concerning the legal status of any territory or the endorsement or acceptance of such boundaries and information. © IsDB 2020 2020–2025 CLIMATE ACTION PLAN January 2020 Table of contents Abbreviations ..........................................................................................................................................iv Executive summary ...................................................................................................................................v Introduction ...............................................................................................................................................1 Context .................................................................................................................................................................................1 Rationale for developing the Action Plan .......................................................................................................................1 Supporting policies and frameworks for IsDB’s five-year Climate Action Plan ......................................................2 Objective ...............................................................................................................................................................................2 IsDB climate finance target ........................................................................................................................5 Approach using MCs’ nationally determined contributions commitments ............................................................7 Increasing IsDB climate finance ......................................................................................................................................7 The IsDB Climate Action Plan ....................................................................................................................9 Pillar 1: Mainstreaming climate action in IsDB operations .......................................................................11 Mainstreaming with Member Country partners ........................................................................................................ 12 Climate risk management across IsDB operations .................................................................................................. 13 Climate change integration into sector strategies .................................................................................................... 14 Pillar 2: Promoting climate change resilience ..........................................................................................15 Sectoral approaches ....................................................................................................................................................... 15 Policy approaches ........................................................................................................................................................... 16 Technical assistance and Reverse Linkages programme ....................................................................................... 17 Pillar 3: Green growth and supporting the transition to a green economy ................................................19 Building partnerships to catalyse MCs’ transition to low-carbon, green economy ............................................ 20 Pillar 4: Leveraging resources .................................................................................................................23 Blended finance and concessional support ............................................................................................................... 23 Alignment with the Paris Agreement........................................................................................................25 Annex 1: Approach to building IsDB’s climate finance target ....................................................................27 Annex 2: Climate change integration into sector strategies .....................................................................29 Annex 3: Logical framework for IsDB climate action ................................................................................33 Annex 4: IsDB climate change implementation framework ......................................................................35 iii 2020–2025 CLIMATE ACTION PLAN Abbreviations BB Building Block CCP Climate Change Policy COP Conference of the Parties (UNFCCC) CSA Climate-smart agriculture IFI International financial institution IsDB Islamic Development Bank MC Member Country MCPS Member Country Partnership Strategy MDB Multilateral development bank MENA Middle East and North Africa NAMA National appropriate mitigation actions NAPA/NAP National adaptation programmes of action NDC Nationally determined contribution OCR Ordinary capital resources SDG Sustainable Development Goal SVT Simplified Verification Tool TA Technical assistance operations UNFCCC United Nations Framework Convention on Climate Change iv Executive summary In February 2019, the IsDB Board of Executive approaches and interventions (nationally determined Directors approved the IsDB Climate Change Policy contributions, national appropriate mitigation actions, (CCP) with the overarching goal of deepening national adaptation programmes of action); and sustainable development imperatives for a better (iii) financial support tailored to adaptation and and safer planet. The CCP strategic pillars include resilience, such as technical assistance and Reverse mainstreaming climate action in the Bank’s operations, Linkage programmes. For Pillar 3: Green growth promoting climate change resilience, supporting and supporting the transition to a green economy, transition to green economy and leveraging resources IsDB will increase efforts that help MCs undertake to meet the Bank’s climate and development green economic transition through ramping up objectives. To meet the goals of this policy, it will country-level investment and technical assistance for be essential to have: (i) increased capacity within green economy transition and policy support. This the Bank and among key stakeholders in Member will include investments and technical assistance in Countries (MCs); (ii) a sustained and growing pipeline (i) renewable energy; (ii) energy efficiency measures of climate-related financing opportunities; (iii) a in all sectors (e.g. water, manufacturing, production); sustained ability to mobilize additional resources and (iii) low-carbon transport and mass transit; (iv) climate- access to concessional sources of funding (including smart agriculture with a carbon reduction impact/co- climate finance); and (iv) increased requests from benefit; (v) sustainable trade; (vi) clean/green private MCs for these services. The IsDB Climate Action Plan sector investment; and (vii) support for innovative responds to the essential requirements to meet the technologies and/or research and development in goal of the CCP. complementary technologies, such as battery storage or carbon capture and storage and/or sequestration. The Climate Action Plan will be implemented from For Pillar 4: Leveraging resources, in addition to core 2020 to 2025; it outlines IsDB’s plan to align its financing from the Bank’s ordinary capital resources, operations and business activities to support MCs in the next five years, the Bank will endeavour to in transitioning to more resilient and sustainable leverage additional resources for climate change economies. This Climate Action Plan recognizes through (i) the design of innovative products and that synergy between the CCP pillars will be a services; (ii) off-balance sheet resource mobilization, key determinant of its overall success. During the such as domestic in-country resources, private sector Climate Action Plan implementation period, under institutions, philanthropic foundations; and (iii) the Pillar 1: Mainstreaming climate considerations in creation and management of specialized financing IsDB operations, the Bank will intensify its climate and/or trust fund vehicles. change mainstreaming effort by systematically incorporating climate change into its operations and In line with the IsDB CCP, and commitments to support focusing on the most pressing needs of its MCs MCs in their low-carbon, climate-resilient sustainable (especially building resilience, robust infrastructure development, the Climate Action Plan also shows and economic growth) through its sector analysis how IsDB has committed to a climate finance target and diagnostics,
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