Climate Financing and Low-Carbon Transition: A Systematic Review of the Role of International Development Banks

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Abstract

Purpose: This study investigates the function of international development banks (IDBs) in financing climate initiatives and supporting the transition toward low-carbon economies. It examines the strategies employed, the effectiveness observed, and the challenges encountered by international development banks in augmenting climate financing, as well as their collaborative efforts with other financial entities to improve climate financing outcomes.

Methodology: The study was structured according to the PRISMA methodology, which involved a comprehensive review of scholarly literature sourced from reputable academic platforms, including Google Scholar, Elsevier’s ScienceDirect, and SpringerLink, covering the timeframe from 2015 to 2024. The review identified 35 scholarly articles considered relevant to the objectives of this research.

Result: The review elucidates the strategies implemented by international development banks in promoting climate financing, including green bonds, climate funds, carbon pricing mechanisms, and partnerships with other financial institutions. Moreover, these findings illuminate the obstacles encountered in the expansion of climate finance and propose potential solutions to address these issues.

Novelty and contribution: This study offers a synthesized perspective on how IDBs integrate institutional capacity, innovation, and policy coordination to advance climate finance. It contributes a clearer understanding of their strategic role in accelerating the global low-carbon transition.

Practical and social implications: The findings guide policymakers and development financiers on improving institutional frameworks and partnerships for climate finance. Strengthened coordination can enhance green investment flows, promote sustainable growth, and support social and environmental resilience.