BAKU, Azerbaijan, January 7. The Islamic Development Bank (IsDB) urges for meaningful increases in global climate finance to meet developing nations' needs, Chairman of the Islamic Development Bank (IsDB) Group Dr. Muhammad Sulaiman Al Jasser said in an exclusive interview with TurkicWorld.
Referring to the outcomes of COP29, held in Baku in November 2024, he pointed out that IsDB had a significant and impactful participation in this event.
"Our presence was marked by active engagement in numerous sessions and high-level meetings. As has been the practice of the past several years, the establishment of the IsDB Group Pavilion, alongside with our participation in the joint MDB Pavilion, served as a platform to showcase the Group's extensive climate initiatives and strategic plans. These efforts underscore our unwavering commitment to climate action, alignment with our realigned strategic direction, and dedication to advancing sustainable development in line with the UN Sustainable Development Goals (SDGs).
As for the key takeaways from COP29 I can refer to:
1. The critical importance of climate finance, as demonstrated by the Baku Finance Goal (BFG), aligns with IsDB Group's objective to enhance financing capacity for its member countries. This goal is further supported under the COP process by the Azerbaijan Presidency. The COP29 Presidency BFG called on all actors to work towards providing US$1.3 trillion annually to climate finance in the developing world. The BFG more specifically targets developed countries to mobilize at least US$300 billion per year for developing countries by 2035, with special attention paid to the least developed countries and small island developing states.
While the commitment to mobilize $300 billion annually by developed countries does represent a significant step forward, it falls considerably short of the financial requirements and expectations articulated by the developing world. The scale of climate challenges, as reflected in the costed needs of nationally determined contributions estimated at USD 5.1 – 6.8 trillion through 2030, underscores the need for a more ambitious approach to financing. Therefore, we urge all stakeholders to continue to strive for meaningful increases in global climate finance to bridge these gaps and meet the urgent needs of developing nations.
2. The urgency of ramping up investments in climate adaptation and resilience reflects the significant proportion of climate finance commitments allocated to these areas. For context, since COP27, the IsDB Group has approved more than US$5.5 billion in critical climate financing, 47% of which is dedicated to climate adaptation .
3. The reaffirmation of our commitment to the Paris Agreement is demonstrated through the alignment of our operations, strategic objectives, with a focus on facilitating the assurance of a fair and just transition for our member countries that are largely from the Global South. To this end, the IsDB Group supported seven of the 14 initiatives of the COP29 Presidency with the endorsement of the declarations of Azerbaijan on the COP29 Truce Appeal, COP29 Global Energy Storage and Grids Pledge, COP29 Declaration on Green Digital Action, COP29 Multisectoral Actions Pathways (MAP) Declaration to Resilient and Healthy Cities, and the COP29 Declaration on Water for Climate Action.
4. The need for collaborative approaches and partnerships to tackle climate challenges is reflected in our engagement in high-level dialogues and side events with partners and MDBs aimed at supporting Azerbaijan and other member countries heavily impacted by climate change, including our joint MDBs announcement of US$120 billion of climate finance for low- and middle-income countries by 2030," he said.
Agreements signed during COP29
Al Jasser went on to add that the agreements signed with the Government of Azerbaijan during COP29, regarding the "Construction of the Main Irrigation Canal from the Maiden Tower Reservoir" project and the Reverse Linkage Technical Assistance Grant Agreement, are pivotal for advancing our joint climate and development objectives with the country.
"Specifically, the Construction of the Main Irrigation Canal from the Maiden Tower Reservoir project is vital for enhancing water management and agricultural productivity in the region. This aligns with the goals of improving food security and promoting sustainable agriculture, which are crucial for climate adaptation. Also, the Reverse Linkage Technical Assistance Grant Agreement underscores our commitment to knowledge exchange and capacity building. By facilitating technical cooperation among our member countries, we can share best practices and innovative solutions for climate resilience and sustainable development," he said.
IsDB’s commitments to increased climate financing
the IsDB Group chairman noted that indeed, the Multilateral Development Banks (MDBs) announced projections for their contributions to climate action as US$ 170 billion per year by 2030, with US$ 120 for low- and middle-income countries.
"Under the joint statement issued at COP29, the IsDB committed several specific actions to support ambitious climate outcomes. At IsDB Group we set an ambitious target to allocate 35% of our total commitment to climate finance by 2025, with a significant portion dedicated to adaptation and resilience. In 2023, 46% of the Bank's total approvals were directed towards climate action, demonstrating a robust and increased ambitious commitment to low carbon and climate resilient initiatives. We fully aligned our sovereign operations with the objectives of the Paris Agreement, ensuring that our financial flows support low-carbon and climate-resilient development pathways," Al Jasser said.
He pointed out that for Innovative Financial Instrument through Islamic Finance Capital Market IsDB will continue to leverage its Sustainable Finance Framework to issue green and sustainable Sukuk, mobilizing resources for climate-friendly projects.
"We will enhance our efforts to provide technical assistance and build the capacity of our member countries to develop and implement effective climate action plans. We will moreover strengthen our partnerships and collaboration with other MDBs, international organizations, and the private sector players to mobilize additional resources and expertise for climate action. These commitments reflect our dedication to driving meaningful and transformative change in member countries, supporting their efforts to achieve sustainable development and resilience in the face of climate change," added the IsDB Group chairman.
Leveraging Islamic banking principles to combat climate change
Al Jasser noted that the Islamic finance principles support climate action and sustainable development through risk-sharing, where financial transactions involve the shared risk between lender and borrower; ethical investments, which mandate investments in halal activities that do not pose any harm to individuals or society; and social justice, which promotes social welfare and economic justice aiming to reduce poverty and inequality.
"It is important to highlight how the IsDB Group leverages Islamic Finance resources to effectively combat climate change and promote sustainable development. The core activities of the IsDB Group revolve around Financing Sustainable Infrastructure, positioning the Group as a leader in investments that drive sustainable development. These efforts include funding energy-efficient buildings, enhancing public transportation systems, and improving water management solutions. We continue to leverage our resources to fund these projects, ensuring that they are designed and implemented according to sustainable principles. These interventions are mainly made possible through:
1. Green Sukuk, or Islamic bonds , are a crucial tool in Islamic finance used by IsDB to fund projects that promote renewable energy, clean transportation, and other environmentally friendly initiatives. By leveraging this innovative financing tool, the IsDB supports its 57 member countries in achieving their climate action and sustainable development goals. These issuances have generated significant capital for projects with positive environmental impacts.
Through Green Sukuk, the IsDB mobilizes funds for substantial investments in renewable energy, sustainable agriculture, and other climate-friendly initiatives. In the last five years, through tour sustainable finance framework, we have issued over US$ 8 billion, comprising green and sustainable Sukuk investments to support our member countries. Some of the projects financed under this modality include Senegal’s US$ 337 million Dakar to Blaise Diagne International Airport (AIBD) Regional Express Train project; the 600-Megawatt Clean Electricity Asagi Kalekoy Dam in Turkiye, as well as the country’s numerous solar power plants made up of 200,000 large-scale solar panels.
2. Public-Private Partnerships (PPP): Through our PPP funding modality and advisory services, we facilitate private sector investment in large-scale climate related projects, such as solar and hydropower initiatives, including the large-scale Ben Ban Solar Project in the Aswan Governorate in The Arab Republic of Egypt.
3. Capacity Building for Member Countries though Technical Assistance : At IsDB we offer technical assistance and training support to our member countries and financial intermediaries to enhance the knowledge and skills of stakeholders promoting the development of climate-resilient projects and the broader development of products that foster sustainable development objectives. For instance, climate smart and resilient agriculture programs in the Sahel Region covering six countries in West Africa include significant components that support capacity enhancement of drought-resistant crops and other water-efficient solutions.
4. Islamic finance and Climate Justice: Islamic banking's focus on social justice and community welfare promotes initiatives aligned with sustainable development goals (SDGs) such as poverty eradication, education, and health which are crucial for a fair and just transition in the climate discussion. The IsDB Group actively explores ways to support its member countries fairly and justly, ensuring the facilitation of their economic growth and development prospects while protecting the planet," he explained.
IsDB's vision for achieving Sustainable Development Goals
Al Jasser noted that the celebration of our 50th anniversary this year was a landmark moment to celebrate the Group's considerable achievements and chart our future, reaffirming its commitment to driving sustainable development in line with the development national priorities of member countries and the Sustainable Development Goals.
"Since inception in 1975, the IsDB has approved over $193.6 billion across 12,078 operations . This remarkable contribution has been about improving lives and creating broad-based impact in our member countries and bringing about lasting and positive change for communities. Our vision focuses on resilience, innovation, and inclusivity. We are intensifying efforts to strengthen food security, drive green growth and foster socio-economic development.
For instance, our Food Security Response Program , with a total allocation of $10.54 billion, continues to address urgent challenges while building long-term resilience. We are also committed to advancing human capital development. Last year alone, we approved $420.59 million for education and $1.4 billion for healthcare initiatives, including transformational programs in countries like Indonesia and Tajikistan. In addition to US$213.6 million for poverty reduction projects and regional integration. We furthermore achieved 37% climate finance share of total commitments, exceeding the 35% target for 2025 Technology and innovation are also central to our strategy," said the IsDB Group chairman.
He noted that through initiatives like the Technology Deployment Cooperation Program and partnerships with global tech leaders, IsDB is bridging digital divides and fostering inclusion.
"In May 2024, the IsDB Board of Governors marked this year’s 50th anniversary of the Islamic Development Bank by adopting the Riyadh Declaration. This historic declaration celebrates the IsDB’s legacy, reaffirms its ethos, and clarifies its vision for the future. It lays out IsDB’s vision towards promoting economic cooperation, investment, and intertrade, and to mobilizing and channeling funds and other resources flowing from within and beyond the member countries in order to drive economic and social development, build capacities, and respond to challenges and emergency crises locally and globally, while embracing innovative tools, approaches and technologies.
It is aiming at strategically positioning the IsDB Group within the South-South cooperation arena by consolidating its role in promoting regional integration, intra-regional investments, intertrade, and exchange of developmental expertise and experience; developing regulatory and institutional environments; building capacities; and mobilizing the necessary partnerships.
We remain steadfast in our mission to serve our members countries and humankind. By prioritizing sustainable infrastructure, inclusive human development, and climate action, we aim to continue making a meaningful difference in the lives of communities around the world and maximizing the impact," Al Jasser concluded.
