Alignment With Paris Agreement
Development banks and the ERDF include multilateral and bilateral institutions of various sizes, financial assets and operational priorities. Although heterogeneous, development banks and the ERDF have a fundamental and determining characteristic – their business model is that of a financial institution, which means that their business activities must generate financial income to cover their operating and financing costs. As such and necessarily, the core operations of these institutions are based on non-eligible financial instruments. After capitalization, development banks and the ERDF will be able to continue to exploit and recycle their financing, although they are limited in their ability to finance high-risk high-risk activities due to the lack of additional subsidies or funding. As part of their efforts to align their activities with the objectives of the Paris Agreement, suppliers may choose to strengthen or expand the climate integration approaches they already use to achieve the objectives set out in Article 2.1. Climate integration generally involves a top-down decision on the consideration and consideration of climate change in all the activities of an institution and requires a coherent anchoring of these objectives throughout development cooperation. It can be an instrument to advance the transition to low-emission, climate-resilient pathways. Development cooperation providers should support the establishment of a regulatory and policy framework that will enable economic and social sectors to transform themselves over time, in harmony with low-carbon and climate-resilient means. All economic actors – whether they have an impact on sustainable development or whether they have a trade priority – have an interest in directing their activities towards the long-term objectives of the Paris Agreement: development cooperation can only facilitate this necessary transformation if suppliers commit to using up-to-date information on both climate change and sustainable development progress to define their institutional priorities and guide their work with developing countries. The Paris Agreement sets targets that countries will pursue over several decades.
It goes without saying that the Parisian orientation is not a single or static task; rather, it is an ongoing and dynamic process through which suppliers should draw on the latest knowledge to regularly assess and adapt their efforts and exploit new opportunities with the greatest potential for impact (UNFCCC, 2015); World Resources Institute/UNDP, 2018. This approach supports the ratchet mechanism of the Paris Agreement and the process of assessing collective progress in achieving the agreement`s objective and its long-term goals.