Multilateral development banks (MDBs) led by Global South countries are emerging as channels for directing climate finance to emerging market and developing economies (EMDEs). These Southern-led MDBs are scaling up climate-related investments despite facing financial and technical constraints.

Due to their governance, Southern-led MDBs can alleviate suspicions of external imposition and encourage greater uptake of climate investments. Their deep regional knowledge helps them select projects that combine climate benefits with economic growth and livelihood improvements. The international community can help accelerate the role of Southern-led MDBs in climate finance with targeted financial and technical support.

This paper provides evidence from recent innovations that can encourage MDB management, shareholder governments and external partners to increase the effectiveness of Southern-led MDBs as channels for climate finance.

Report by the Overseas Development Institute