Climate and development finance FAQ

1. Which OECD datasets and publications is this FAQ related to?

2. What are the differences between the Climate-Related Development Finance dataset and the USD 100 Billion Goal analysis?

3. What do we mean by “development finance” and “development finance for climate”?

4. What is climate finance?

5. How are the data collected?

6. What is the difference between the terms “climate-specific” and “climate-related”?

7. How do bilateral providers produce climate-specific data?

8. How do multilateral providers produce climate-specific data?

9. What are the ‘imputed multilateral shares for climate’ and how do they differ from the ‘multilateral attribution shares for developed countries’?

10. Do climate finance and development finance have the same geographical scope?

Q&A Summary

This FAQ looks in particular at the interlinkages between the data and analyses published by the OECD in two separate streams of publications:

• The Climate-Related Development Finance dataset (CRDF), published annually by the OECD-DAC, which includes official development finance activities that have been assessed by providers as pursuing a climate-related objective or having a climate-specific component.
• The OECD Climate Finance and the USD 100 Billion Goal book series, first published in 2015 and most recently in June 2024, which presents aggregate and semi-aggregate trends of climate finance provided and mobilised annually by developed countries for developing countries in the context of the collective USD 100 billion goal. 

Due to the interlinkages and overlaps between the Climate-Related Development Finance dataset (CRDF) and the “USD 100 Billion Goal” analyses, as well as the different accounting methodologies, the aggregated values both follow similar relative trends but also display differences, particularly with respect to bilateral donors and multilateral institutions.

Bilateral donors report climate-related data to the OECD through the Rio markers, and climate-specific data to the UNFCCC, using different methodologies (see Question 5). Climate-related figures take into account the whole project size and are, at an aggregate level, therefore, higher than climate-specific ones. 

Note: The figure excludes non-allocable ODA (e.g. debt relief, expenditure in donor countries and general budget support). The orange line shows climate-specific values, which are not necessarily based on Rio marker reporting. To assure homogeneous comparison between development and climate finance, this figure uses, to the maximum extent possible, the same country listings adopted in the OECD USD 100 billion report as well as current prices as used in that USD 100 billion report.

Source 1; Source 2; Source 3.

Multilateral institutions report development finance with climate components (i.e. the MDBs’ own methodology that results in climate-specific amounts) and in a few case with the Rio markers (i.e. climate-related) to the OECD. Additionally, multilateral climate finance included in the OECD USD 100 billion reports only takes into account the share that is attributed to developed countries based on capital paid in by countries and, for relevant multilateral institutions, raised on capital markets (see Figure 2 and Question 9). For this reason, the multilateral climate finance figures showcased in the USD 100 billion reports are, at an aggregate level, lower than the corresponding figures published in the CRDF dataset. 

Note: Multilateral development finance includes climate components for MDBs and most multilateral institutions, and the Rio markers full value for other multilateral institutions. To assure homogeneous comparison between development and climate finance, this figure uses, to the maximum extent possible, the same country listings adopted in the OECD USD 100 billion report as well as current prices as used in that USD 100 billion report.

Source 1; Source 2; Source 3.

Development finance refers to financial resources used to fund development co-operation activities. The OECD's Development Assistance Committee (DAC) has a mandate to monitor development finance and its characteristics (including whether it supports climate change adaptation or mitigation).

Official Development Finance (ODF) data collected by the OECD-DAC are made up of flows from official sources, both bilateral and multilateral, to a list of eligible countries, with development as a purpose. ODF data collected by the OECD include Official Development Assistance (ODA), Other Official Flows (OOF) and Private Sector Instruments (PSI) as defined below: 

• Official Development Assistance (ODA) flows are defined as

… those flows to countries and territories on the DAC List of ODA Recipients and to multilateral development institutions which are:

i. provided by official agencies, including state and local governments, or by their executive agencies; and

ii. each transaction of which:

a) is administered with the promotion of the economic development and welfare of developing countries as its main objective; and

b) is concessional in character (…).

• Private Sector Instruments (PSI) include loans to the private sector, guarantees, equity investments, mezzanine finance instruments and reimbursable grants. Under certain conditions, PSI activities are included in ODA. The PSI category applies only to bilateral donors. The PSI category has been reported starting from 2023 data.
• Other Official Flows (OOFs) are flows of official development finance that have the same characteristics as ODA but are not concessional enough to qualify as ODA.

Development finance for climate is a subset of development finance that is reported by bilateral and multilateral donors as supporting climate action in developing countries.

ODF activities can be reported as supporting climate change adaptation or mitigation:

• Bilateral providers (and few non-bank/financial multilateral institutions) apply the Rio marker methodology to identify if, and to what extent, the activities reported pursue climate objectives, climate change mitigation or adaptation. The Rio markers – introduced to track development support to the three UN environmental conventions set at the 1992 Summit in Rio – must be reported for ODA-eligible activities and are voluntarily reported for activities covered by PSI and OOF (see Question 5).
• Multilateral Development Banks (and other multilateral institutions) apply the Joint MDB Methodology on Tracking Climate Finance, also called Climate Components, which identifies the shares or components of each activity that support climate change adaptation or mitigation. The Climate Components methodology is climate-specific (see Question 5 and Question 8).
• In climate analysis, the European Investment Bank (EIB), which is among the EU institutions, is presented as a multilateral provider (MDB).

Private finance mobilised by official development finance (including ODA, OOF and PSI) is reported at the activity level by bilateral and multilateral providers to the DAC. However, this type of funding originates from non-official (private) sources and is thus not accounted for in ODF as such but presented separately as part of so-called blended finance activities. 

Climate finance data is used to monitor the finance provided and mobilised in support of climate change adaptation and mitigation in developing countries, notably to assess progress towards the USD 100 billion annual climate finance goal, which runs to 2025. The definition of climate finance presented in the UNFCCC SCF Sixth Biennial Assessment and Overview of Climate Finance Flows is as follows:

Climate finance aims at reducing emissions and enhancing sinks of greenhouse gases, aims at reducing vulnerability, increasing adaptive capacity, and mainstreaming and increasing resilience of human and ecological systems to negative climate impacts, and includes financing for actions identified in a country’s nationally determined contribution, adaptation communication, national adaptation plan, long-term low-emission development strategy or other national plan for implementing and achieving the goals of the Paris Agreement and the objective of the Convention.

In 2010, COP 16 recognised that developed country Parties committed, in the context of meaningful mitigation actions and transparency on implementation, to a goal of jointly mobilising USD 100 billion per year by 2020 to address the needs of developing countries. The goal was later extended to 2025. The decision indicates that such finance would come from a wide variety of sources, i.e. public and private, bilateral and multilateral, and include alternative sources of finance. Against this backdrop, the OECD captures four different climate finance components in its reports on tracking progress towards the USD 100 billion goal: 

• Bilateral public climate finance provided by developed countries’ institutions, notably bilateral aid agencies and development banks.
• Multilateral public climate finance provided by multilateral development banks and multilateral climate funds, attributed to developed countries.
• Climate-related officially supported export credits, provided by developed countries' official export credit agencies.
• Private climate finance mobilised by bilateral and multilateral public climate finance, attributed to developed countries.

For each of these components, reporting entities identify climate activities within their portfolios and assess their climate specificity on the basis of the methodologies referred below (see Question 5, Question 7, Question 8).

Climate finance and development finance data availability and characteristics vary by providers, as follows:

• Bilateral donors submit:
  • Development finance data to the DAC as part of their annual reporting of development finance (including private finance mobilised) in the Creditor Reporting System (CRS). In this context, Official Development Assistance (ODA) activities must be marked with the Rio markers on climate change adaptation or mitigation. Other official flows (OOFs) can also be reported or marked with Rio markers on a voluntary basis (see Question 1). The data reported also includes private finance mobilised.
  • Bilateral climate-specific data to the UNFCCC as part of the biennial reporting cycle. Prior to 2024, this was in the form of Biennial Reports (BRs) to the UNFCCC. Starting in 2024, Parties submit Biennial Transparency Reports (BTRs) using the Enhanced Transparency Framework negotiated under the Paris Agreement, which elicits more granular data. Most developed countries that are also DAC members use climate-related Rio markers data submitted to the OECD as the starting point for their climate-specific submission in their BTRs (see Question 7). In the UNFCCC and Paris Agreement data collection processes, each reporter may employ different underlying assumptions, definitions, and methodologies, and thus the resulting data are heterogeneous (for example, sectors classifications could be different from country to country, some reporters include both commitments and disbursements, some others include only one of the two dimensions etc.).
• Multilateral Development Banks (MDBs) submit:
  • Climate-specific data to the DAC, per calendar year, based on the OECD DAC statistical standards (while MDBs have different fiscal years). Climate-specific data from MDBs, including the amounts mobilised from the private sector, follow the climate components methodology, which identifies the shares of financing devoted to climate change adaptation, mitigation, or dual-benefits, for each reported activity. MDBs do not have any reporting obligations under the Paris Agreement. The figures that MDBs publish independently might present differences with the data transmitted to, and published by, the OECD, due to definitional differences (e.g. calendar or fiscal year, commitment versus board approval, recipient list etc.).
• Other Multilateral Institutions submit:
  • In most cases, climate-specific data to the DAC (e.g. the Green Climate Fund and the Climate Investment Funds). They produce these data for their own purposes, following the Joint MDB Methodologies on Tracking Climate Finance and submit them annually to the DAC.
  • In few cases, climate-related data to the DAC following the Rio markers methodology (e.g. the GEF, FAO).

In the context of finance for climate action, the terms “climate-specific” and “climate-related” refer to the way the climate focus of the activities is reported. 

• “Climate-related” development finance refers to activities that contribute to climate change adaptation or mitigation, with climate as either the primary or a secondary focus.
  • The Rio Markers methodology is a way of assessing the degree to which climate considerations are factored into development co-operation activities, i.e. if activities are climate-related. The Rio Markers on climate change identify if climate change adaptation or mitigation is the principal (primary) or a significant (secondary) objective of the activities, or if the activity does not target climate change. As the Rio markers serve to identify activities targeting to a policy objective, the resulting data are considered descriptive rather than quantitative, with the scoring system “principal” / “significant” / “not targeted” meant to give information on the degree to which the objective is implemented:
    • Principal (primary) policy objectives are those which can be identified as being fundamental in the design and impact of the activity and which are an explicit objective of the activity. They may be selected by answering the question “would the activity have been undertaken without this objective?”.
    • Significant (secondary) policy objectives are those which, although important, are not one of the principal reasons for undertaking the activity.
    • The score not targeted means that the activity has been screened against, but was found not be targeted to, the policy objective.

Rio markers apply to activities as a whole, not attempting to single out components that may be more climate-related than others. Table 1 provides examples of activities reported with the Rio markers. 

Note: each of these examples derives from one specific entry in the CRS database, and might not describe the totality of the project.  

Source: CRS 

• Climate-specific finance refers to the specific component or share of an activity that is exclusively dedicated to supporting climate change adaptation or mitigation (or in few cases cross-cutting) activities. A climate-specific amount could be 100% of the face value of the activity, or a lower value. Parties to the Paris Agreement are required to report climate finance in climate-specific terms to the UNFCCC in their Biennial Transparency Reports’ data collection forms.
  • Bilateral providers adopted a variety of methodologies to produce climate-specific data in their BTRs, which are in most - but not all – cases linked to the data submitted to the OECD-DAC through coefficients or other adjustments (see Question 5).
  • Multilateral Development Banks apply the MDB climate components methodology, a climate-specific measure which identifies the share of an activity that directly contributes to climate change adaptation, mitigation or as cross-cutting (see examples in Table 2).

Note: each of these examples derives from one specific entry in the CRS database, and might not describe the totality of the project.

Source.

The OECD regularly surveys DAC members on the coefficients or other adjustments that they adopt to submit data to the environmental conventions, including the UNFCCC and the Paris Agreement. According to the latest such survey, bilateral providers use broadly three types of approaches to produce climate-specific figures when reporting under the Paris Agreement:

1. Fixed coefficients based on the Rio marker scores. Under this method, which is adopted by most DAC members, a coefficient is applied to the activities based on the value of the Rio marker for climate change adaptation or mitigation (Figure 4).

• For activities reported with only one marker, if the activity is classed as principal, a coefficient in the range of 85%-100% is applied.
• If the activity is classed as significant, a much wider range of fixed coefficients is used. In most cases, members apply a fixed coefficient between 30% and 50% to the activity.
• If the activities are marked with both the Rio markers on adaptation and mitigation, most commonly the coefficient associated with the highest score is applied.
• Some members use a fixed coefficient as a general rule but apply several exceptions to increase granularity for special cases.

2. Case by case approach. Some OECD-DAC members use their CRS reporting as a starting point and apply a project-specific coefficient based on the characteristics of each activity reported.

3. Other approaches. For some members, the reporting of climate-specific data to the UNFCCC is not linked with the reporting process to the OECD-DAC or with Rio markers data and is instead.

Source.

Multilateral Development Banks (MBDs) and other multilateral institutions that apply the Joint MDB Methodologies on Tracking Climate Finance methodology (or “climate component” methodology) produce climate-specific data. In doing so, they identify the share of activity financing that contributes directly to climate change adaptation or mitigation.

The climate component of each activity can vary from 100% to 1% (or even less in some cases). The climate component share is determined through specific steps for activities targeting adaptation (which includes an assessment of the vulnerability context and linkages with the project activity) and mitigation (which is based on a positive list of eligible activities). The climate finance data provided by the MDBs and other multilateral institutions are included in the CRDF database published annually, alongside the other available details of each activity.

The figures that MDBs publish independently might present differences with the data transmitted to, and published by, the OECD, due to definitional differences (e.g. calendar or fiscal year, commitment versus board approval, recipient list etc.). 

Imputed multilateral shares for climate

The OECD Secretariat produces a statistical table called ‘imputed multilateral shares for climate’ which showcases, for each multilateral institution for which the information is available in the Creditor Reporting System, the shares of their outflows in support of climate change adaptation, mitigation, or both. 

The table ‘imputed multilateral shares table’ is used to calculate ‘the imputed core contributions for climate’ which are the core contributions to multilateral institutions for each DAC donor, multiplied by the imputed shares for climate (e.g. if 40% of the outflows of a multilateral institution X supports climate, then 40% of each DAC donor’s core contribution to multilateral institution X is ‘imputed for climate’).

The ‘imputed core contributions for climate’ are included in the Climate Related Development Finance dataset (provider perspective). The OECD-DAC statistical system records both the inflows (core contributions or unearmarked flows) to the multilateral institutions and their outflows. To avoid double counting, unearmarked / core contributions to multilateral institutions and their outflows must be accounted for separately. The development finance data for climate are therefore presented under two perspectives:

• Provider perspective – which includes bilateral outflows to recipient countries and the imputed core contributions for climate.
• Recipient perspective - which includes bilateral outflows and multilateral outflows. 

Multilateral attribution shares to developed countries

In assessing climate finance towards the USD 100 billion goal, the OECD Secretariat takes into account only the share of multilateral climate finance that can be ‘attributed’ to developing countries.

Multilateral institutions are typically funded or capitalised by core contributions from both developed and developing countries. In the context of tracking progress towards the USD 100 billion goal, a specific methodology is therefore needed to calculate, for each institution, the share of its outflows attributable to developed countries, with the remainder being attributable to developing countries. Such a calculation considers the most recent and historical replenishment participations by individual countries, as well as, where applicable, the institutions’ capacity to raise funds from the capital markets, and it is publicly documented in the methodological Annex of the 100 billion reports.

The attribution shares applied in 2020 vary from as low as 4.8% for the Development Bank of Latin America (CAF), 5.2% for the Central American Bank for Economic Integration (CABEI) and 28.6% for the Asian Infrastructure Investment Bank (AIIB), up to 100% for the European Investment Bank (EIB), the Adaptation Fund (AF), two of the Global Environment Facility’s (GEF) special funds, as well as the Nordic Development Fund (NDF). Figure 5  showcases concrete examples for projects financed by the International Bank for Reconstruction and Development (IBRD), for which the calculated attribution share is 71.3% and by the African Development Bank (AfDB), for which the share is 61.2%. This means that for every 100 USD of climate-specific finance reported by IADB and AfDB, respectively USD 73.9 and USD 61.2 are accounted as climate finance provided and mobilised by developed countries.

Note: Rounding has been applied.

Source 1; Source 2.

Development and climate finance also differ in terms of provider and recipient lists. In particular:

• Development finance is provided:
  • by DAC members, other bilateral donors which report voluntarily to the DAC and multilateral institutions.
  • to countries and territories included in the DAC List of ODA recipients, which is revised and updated on a regular basis.
• Climate finance (as defined in the OECD reports tracking progress towards the USD 100 billion goal) is provided:
  • by the bilateral donors included in the UNFCCC Annex II, all Member States of the European Union, as well as Liechtenstein and Monaco.
  • by multilateral institutions, to which a coefficient is applied to take into account the ownership structure of the multilateral institutions (see Question 8 and Question 9).
• to developing countries, which refer to countries and territories included on the DAC list of ODA Recipients for development finance and/or on the non-Annex I list of Parties to the UNFCCC (which is a static list set at the same time as the convention itself).