Biodiversity and Development Finance 2015-2022

4. Multilateral institutions’ development finance for biodiversity

Looking at multilateral development finance for biodiversity (both concessional and non-concessional) using the biodiversity-related approach in Figure 4.1, estimates show an increase over 2015-22, from USD 1.4 billion in 2015 to USD 5.1 billion in 2021 and USD 11.3 billion in 2022, representing USD 4.8 billion on average for the period. Flows experienced a significant 123% increase from 2021 to 2022 (mainly explained by the significant-like activities). In relative terms, however, the estimated share of biodiversity-related development finance represents a low-share overall of total multilateral development finance over 2015-22 (3%) albeit increasing from 3% in 2021 to 6% in 2022. The peak share recorded in 2022 (6%) can be explained by the significantly high contributions from three multilateral development banks (MDBs, representing 65% of total biodiversity-related finance).

In addition, using the biodiversity-specific approach (see Box 2.1 and Annex A), the analysis finds (Figure 4.2) that finance provided by multilateral institutions increased from USD 0.6 billion in 2015 to USD 2.7 billion in 2021 and USD 5.7 billion in 2022, representing USD 2.4 billion for biodiversity activities on average over 2015-22 (representing 2% of total multilateral development finance). In this approach, contributions toward biodiversity-specific activities also increase by 115% from 2021 to 2022. Importantly, in both methodologies, although the share of principal-like biodiversity-related flows remains relatively small over the period (between 8% and 18% in 2015 to 18% to 36% in 2022), it has been increasing over time, almost doubling from 2021 to 2022, when it reached its peak volume (USD 2.1 billion).

Figure 4.1. Multilateral institutions’ biodiversity-related development finance

2015-22, USD billion, full values

Notes: ODF: official development finance. The figure shows the full value of all multilateral flows reported to the OECD.

Sources: Authors’ estimates based on OECD-DAC statistics from OECD (2024[1]), Creditor Reporting System (database), https://data-explorer.oecd.org/s/c and Total Official Support for Sustainable Development (database) from TOSSD (2024[2]), https://www.tossd.org.

Figure 4.2. Multilateral institutions’ biodiversity-specific development finance

2015-22, USD billion, estimates with coefficients

Notes: ODF: official development finance. The figure provides information on multilateral institutions’ biodiversity-specific finance based on estimates with coefficients, reflecting the full value of their core (principal and “principal-like”) activities and applying a coefficient for activities considered as secondary (significant and “significant-like”). Multilateral flows include principal, “principal-like”, significant and “significant-like” data from a variety of sources, including Rio marker data on biodiversity, purpose code data, Sustainable Development Goals 14 and 15 data, and data captured through a keyword search (see Table A.1). For more information on the methodology used to obtain and analyse multilateral institutions’ data, please consult Annex A. Commitments that were not classified by aid type or co-operation modalities were not included in this analysis.

Sources: Authors’ estimates based on OECD-DAC statistics from OECD (2024[1]), Creditor Reporting System (database), https://data-explorer.oecd.org/s/c and Total Official Support for Sustainable Development (database) from TOSSD (2024[2]), https://www.tossd.org.

Almost all multilateral flows for biodiversity (92%) are provided by a few institutions, 9 out of the 65 included in the analysis, with the top 4 accounting for 61% of the total biodiversity-related finance (for a detailed list of institutions included see Annex A). MDBs accounted for 71% of total multilateral biodiversity-related development finance over 2015-22. In turn, other environmental funds and organisations that are part of the United Nations system account for 22% and 7%, respectively, of the total. Although in general total multilateral development finance was also provided by a few institutions over the period (92% reflected by 16 institutions, and the top four 53%), the composition varies by type, with 89% provided by MDBs, followed by 7% of other multilateral institutions and 4% by United Nations agencies.

Figure 4.3 provides an overview of the top ten recipients over 2015-22, which account for 52% of the total estimated development finance for biodiversity of multilateral institutions. In particular, the People’s Republic of China (hereafter “China”) received 17%, mainly provided by 3 MDBs (96%) through loans (97%), and targeting activities related to forest protection and restoration, ecological rehabilitation, sustainable agriculture development, and sustainable land-use management, including water resources conservation. Five of these top recipients coincide with the top bilateral biodiversity recipients, namely Colombia, Indonesia, Brazil, India and Ethiopia. The estimated share of biodiversity-related development finance accounts for 2-8% of total multilateral finance in these countries, except in China where it accounts for 14%. Biodiversity-related development finance accounts for a considerable share of total multilateral finance in Niue (42%), Malaysia (21%), Cuba (20%) and Fiji (19%). Most of the multilateral biodiversity-related development finance flows to upper middle-income countries (UMICs; 50%), followed by lower middle-income countries (LMICs; 26%), and least developed countries and other low-income countries (LDCs and LICs; 24%). Overall, although the top recipients tend to be concentrated around the same countries, these may also vary yearly and, recently, Côte d'Ivoire stands out as well, over 2021-22.

Figure 4.3. Top recipients of multilateral biodiversity-related development finance

2015-22, USD million, full values

Notes: ODF: official development finance. The analysis excludes unspecified and regional allocations, which accounted for USD 185 million and USD 199 million, respectively, or 8% of total multilateral biodiversity-related development finance.

Sources: Authors’ estimates based on OECD-DAC statistics from OECD (2024[1]), Creditor Reporting System (database), https://data-explorer.oecd.org/s/c and on Total Official Support for Sustainable Development (database) from TOSSD (2024[2]), https://www.tossd.org.

The region that received the most biodiversity-related development finance from multilateral institutions over 2015-22 was Asia with USD 1.8 billion (39%, of which 41% targets China only), followed by LAC with USD 1.5 billion (34%) and Africa with USD 1.14 billion (25%; Figure 4.4). In fact, Asia ranked up first on a yearly basis during this period, except in 2021 (i.e. second) and 2022 (i.e. third). Overall, these regions rank differently compared to the shares of total finance allocated during 2015-22: Asia (38%), Africa (31%) and LAC (23%). From an income-level perspective, the figures show that grants are predominantly used in LDCs and LICs (40%), and loans are predominantly used in MICs (57% and 27% in UMICs and LMICs, respectively). From a regional perspective, the estimates point at grants being mainly used in Africa (49% of total grants), while loans are mostly concentrated in Asia (45% of total loans). LAC receives relatively equal shares of all financial instruments being used yet predominantly attracts loans (37% of total loans). In addition, Oceania and Africa receive most of their funding through grants (57% and 52%, respectively), while Asia, LAC and Europe receive it through loans (84%, 81% and 72%, respectively).

Overall, multilateral biodiversity-related finance was mainly deployed through loans (70%) followed by grants (28%). This contrasts with how biodiversity-related development finance is provided by bilateral donors (which predominantly use grants), representing 68% of their flows over 2015-22, but reflects the mandates and operational environments of many of the multilateral institutions. In addition, while recognising their unique mandates, risk appetites, and financing modalities, several multilateral climate funds (e.g. Adaptation Fund, Climate Investments Funds, GEF and GCF) committed to jointly developing an Action Plan on Complementarity and Coherence (GCF, 2024[3]), aiming to increase access, harmonise efforts and enhance collaboration, having direct and indirect impacts on biodiversity finance.

Figure 4.4. Estimated biodiversity-related development finance from multilaterals by region

2015-22, USD, full values

Notes: LAC: Latin America and the Caribbean; ODF: official development finance. Financial instruments represented include: grants (e.g. standard grants); debt instruments (e.g. standard loans, reimbursable grants and other debt securities); equity (e.g. common equity and shares in collective investment vehicles); and other instruments (e.g. subordinated loans and other hybrid instruments). 2. About 4% or USD 185 million of biodiversity-related ODF falls into the ‘unallocated’ category that is not earmarked to a country or region, and so has not been included into this analysis. 3. LAC = Latin America and the Caribbean.

Sources: Authors’ estimates based on OECD-DAC statistics from OECD (2024[1]), Creditor Reporting System (database), https://data-explorer.oecd.org/s/c and Total Official Support for Sustainable Development (database) from TOSSD (2024[2]), https://www.tossd.org.

Most of the estimated multilateral biodiversity-related development finance is allocated to three sectors: 1) agriculture (22%); 2) general environment protection (16%); and 3) water (13%, including water supply and sanitation). This is similar to bilateral trends, which also prioritised agriculture (15%) or general environment protection (31%) when investing in biodiversity. In some sectors, the estimates show that biodiversity-related finance can be highly integrated into multilateral investments, notably in forestry (64%), general environment protection (50%, of which 41% was destined to biodiversity interventions) or fishing (37%; Figure 4.5). However, none of the sectors had biodiversity-related objectives as a main driver for multilateral investments (i.e. significant-like flows are higher than principal-like ones). In effect, multilateral institutions, and in particular MDBs, have committed to step up action to further mainstream nature into their policies and operations, as well as to develop methodologies to track and report “nature positive” investments (Box 4.1).

Figure 4.5. Top socio-economic areas receiving multilateral biodiversity-related development finance

2015-22, USD million, full values

Notes: ODF: official development finance. About 0.2% or USD 10 million of biodiversity-related ODF falls into the “unallocated” category that is not earmarked to a sector, and so has not been included in this analysis. For further information on the classification of socio-economic areas please consult Annex B.

Sources: Authors’ estimates based on OECD-DAC statistics from OECD (2024[1]), Creditor Reporting System (database), https://data-explorer.oecd.org/s/c and Total Official Support for Sustainable Development (database) from TOSSD (2024[2]), https://www.tossd.org.

Box 4.1. Tracking MDBs nature and biodiversity finance

In 2021, at the United Nations Framework Convention on Climate Change (UNFCCC) COP26, ten multilateral development banks (MDBs)1 put forward a Joint MDB Statement on Nature, People and Planet (Multilateral Development Banks, 2021[4]), committing MDBs to further mainstream nature into their policies, investments and operations. In particular, MDBs committed to develop tools and methodologies to track and strengthen reporting on “nature-positive” investments, as well as to enhance public reporting on nature overall.

In line with this commitment, made on Nature Day of the UNFCCC COP28, MDBs defined a set of common principles to help identify, track and report nature-positive finance (MDBs, 2023[5]), facilitating the comparability across MDBs in their respective screening and tracking processes. As such, the common principles will help guide the development of MDBs’ frameworks and internal methodologies for tracking nature-positive finance in a systemic manner while providing support to countries and the private sector in implementing the Kunming-Montreal Global Biodiversity Framework.

Indeed, nature action is gathering momentum among MDBs with further initiatives - including and beyond the focus on tracking investment volumes - ranging from the strengthening of biodiversity safeguards (ADB, 2023[6]), gathering and disclosure of data (EBRD, 2023[7]) and the establishment of partnerships (ADB, 2024[8]; EBRD, 2023[9]) to achieve synergies across actors. In particular, several MDBs (e.g. Asian Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank) have developed nature strategies, platforms and action plans (ADB, 2024[10]; IDB, 2024[11]; EBRD, 2023[12]) as additional steps to scaling up finance.

As MDBs work to address existing limitations regarding the quantification of biodiversity-related development finance, the OECD Secretariat has developed a specific methodology to identify multilateral biodiversity-related activities within the OECD Creditor Reporting System database, thus providing an estimate of multilateral development finance flows for biodiversity while ensuring the data captured are robust (see Annex A). Further, the G7 Foreign Ministers have called on MDBs to increase and report nature finance by CBD COP16 (FCDO, 2024[13]). The OECD looks forward to collaborating with the MDBs as they develop their taxonomy and methodologies to report on their efforts to support biodiversity-related activities, aligning the approaches, as suitable, as well as to engage with other institutions that have developed their own tracking methodology and are keen to align and avoid diverging efforts.

1. Asian Development Bank, African Development Bank Group, Asian Infrastructure Investment Bank, Caribbean Development Bank, European Bank for Reconstruction and Development, European Investment Bank, Inter-American Development Bank (IDB), IDB Invest, Islamic Development Bank, and the World Bank Group.

References

[8] ADB (2024), Canada and ADB Launch New Fund to Support Private Sector Climate Action and Nature-Based Solutions, https://www.adb.org/news/canada-and-adb-launch-new-fund-support-private-sector-climate-action-and-nature-based (accessed on 30 August 2024).

[10] ADB (2024), Nature Solutions Finance Hub for Climate and the Environment, https://www.adb.org/publications/nature-solutions-finance-hub-climate-environment (accessed on 30 August 2024).

[6] ADB (2023), Environmental and Social Framework (Consultation Draft), https://www.adb.org/documents/environmental-social-framework-draft (accessed on 30 August 2024).

[9] EBRD (2023), Blue Mediterranean Partnership steps up support for sustainable blue economy, https://www.ebrd.com/news/2023/blue-mediterranean-partnership-steps-up-support-for-sustainable-blue-economy.html (accessed on 30 August 2024).

[7] EBRD (2023), Technical guidance for EBRD clients on uploading biodiversity data to the Global Biodiversity Information Facility, https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.ebrd.com%2Fdocuments%2Fenvironment%2Ftechnical-guidance-for-ebrd-clients-on-uploading-biodiversity-data-to-the-global-biodiversity-information-facility-.pdf&data=05%7C02%7CDominique.BLA (accessed on 30 August 2024).

[12] EBRD (2023), The EBRD Approach to Nature: Transitioning to a nature-positive economy, https://www.ebrd.com/documents/environment/the-ebrds-approach-to-nature.pdf (accessed on 30 August 2024).

[13] FCDO (2024), G7 Foreign Ministers’ Meeting communiqué (Capri, 19 April 2024) – addressing global challenges, fostering partnerships, https://www.gov.uk/government/publications/g7-foreign-ministers-meeting-communiques-april-2024/g7-foreign-ministers-meeting-communique-capri-19-april-2024-addressing-global-challenges-fostering-partnerships#:~:text=We%20reiterate%20the%20need%20to,terrori (accessed on 7 July 2024).

[3] GCF (2024), Enhancing coherence and complementarity. Annex II. The Multilateral Climate Funds Action Plan on Complementarity and Coherence, https://www.greenclimate.fund/sites/default/files/document/15-enhancing-coherence-and-complementarity-gcf-b39-11.pdf (accessed on 22 August 2024).

[11] IDB (2024), IDB Group Launches Action Plan to Accelerate Natural Capital and Biodiversity Inclusion in Development Projects, https://www.iadb.org/en/news/idb-group-launches-action-plan-accelerate-natural-capital-and-biodiversity-inclusion (accessed on 30 August 2024).

[5] MDBs (2023), MDB Common Principles for tracking nature-positive finance, https://www.eib.org/attachments/lucalli/20230329_mdb_common_principles_for_tracking_nature_positive_finance_en.pdf (accessed on 22 May 2024).

[4] Multilateral Development Banks (2021), Joint Statement by the Multilateral Development Banks: Nature, People and Planet, https://www.eib.org/attachments/documents/mdb-nature-people-planet-common-principles-en.pdf.

[1] OECD (2024), OECD DAC Creditor Reporting System Statistics, OECD.Stat, https://data-explorer.oecd.org/s/c.

[2] TOSSD (2024), Total Official Support for Sustainable Development, https://www.tossd.org/.