The mobilisation of adaptation finance remains constrained by fragmented metrics, misaligned incentives, and institutional barriers within Multilateral Development Banks (MDBs) lending structures. Despite growing recognition of the need for locally-led adaptation approaches, current financial mechanisms are shaped by (geo)political top-down donor priorities and private sector risk-return calculations. MDBs play a pivotal role in this landscape but remain structurally constrained – by their traditional originate-and-hold lending model, their reliance on sovereign lending, and the imperative to maintain AAA credit ratings.

Recent G20 MDB reform discussions, including the Capital Adequacy Framework (CAF) review, have focused on optimising MDBs balance sheets while maintaining financial sustainability. However, despite the growing urgency of climate resilience investments, adaptation finance remains peripheral in these debates.

This proposal argues that MDB reform must be explicitly linked to the development of standardised, locally-led adaptation finance metrics, which can enhance both capital mobilisation and climate resilience outcomes. Building on ongoing MDBs reform efforts, this brief proposes three key interventions.