The Role of National Development Banks in Catalyzing International Climate Finance: Empirical Evidences from Latin America

Significant investments are needed to support the global transition to a low-carbon, climate-resilient future. Unlocking private capital at scale is essential to fill the current financing gap and achieve transformational impacts, but there are several barriers to overcome for this to happen. This study sought to analyze the role that national development banks (NDBs) could play to bridge the financing gap by scaling up private investment. Their knowledge and long-standing relationship with the local private sector places them in a privileged position to understand local barriers to investment as well as risks and opportunities. Drawing empirical evidence from NDBs’ experiences within the Latin American and the Caribbean (LAC) region, the study finds that while many NDBs are already piloting an array of financial and nonfinancial instruments to promote and leverage private low-carbon investments, these institutions are at diverse stages of “readiness” to fully promote climate-related programs. Several NDBs still need to build and/or strengthen capacity and acquire experience in the structuring, risk assessment, and monitoring of climate-relevant projects in order to take a more central role in the international climate finance landscape.