AFD // 2021 Universal Registration Document

STATEMENT OF NON-FINANCIAL PERFORMANCE Contribution of the Group’s activity to sustainable development

facilitated the involvement of these NGOs in the preparation of Finance in Common Summit. The partnership with the Institute for Climate Economics (I4CE) contributes to the development of its work, and to its implementation at the international level and in developing countries, in areas such as the management of climate finance, assessment tools for the alignment of public budgets with long-term objectives, financial regulations and the alignment of financial institutions with the Paris Agreement. Lastly, through its contribution and active participation in the Mainstreaming Climate in Financial Institutions (4) initiative, AFD participates in dialogue with around fifty public and private financial institutions and thus contributes to the experience-sharing activities and technical analyses carried out within the Initiative on various topics such as financial climate risks, alignment with the Paris Agreement (5) , or the implementation of climate processes and tools within institutions. 2.4.3.4 Progress in addressing financial climate risks AFD holds an important dialogue on the consideration of financial climate risks with its peers and financial systemplayers, and contributes to the sharing of best practices. Since 2017, the AFD Group has been working to integrate financial climate risks into its risk analysis processes through various projects. Following an initial mapping of the AFD portfolio’s exposure to physical risks, a methodology for assessing physical risks and operational tools was rolled out in 2020 enabling the Group to systematically measure these risks when granting new loans and to engage in dialogue with its most exposed borrowers. In 2021, the Group continued its work using a similar approach for transition risks. These considerations were fuelled by the Group’s voluntary participation in the ACPR (Autorité de contrôle prudentiel et de résolution) climate stress test exercise in 2020, focusing on transition risks. Based on the assumptions provided by the regulator and the macroeconomic data of a scenario leading to carbon neutrality by 2050, the potential impact on the quality of the AFD Group portfolio was studied. In 2021, the Group also made progress in integrating climate risks into the service offering to financial systems, including central banks, to identify potential collaborations and public policy dialogues on the low-carbon transition led by AFD with country authorities. As part of the 2021 Finance in Common Summit (FiCS), AFD published its first TCFD report, thus presenting its activities in the four areas identified by the Taskforce: governance, strategy, risk management, and the indicators or metrics used. Lastly, in 2021, AFD developed an online training module dedicated to financial climate risks (6) in order to develop awareness and due consideration of these risks within the Group, but also among the community of partner development banks.

edition of the Finance in Common summit, held in October ɸ 2021, confirmed the numerous commitments of more than 500 public development banks, in terms of aligning their financing with the Paris Agreement, ending international coal financing, taking action for biodiversity, and accelerating investments in renewable and adaptation energies (1) . This second edition also showcased agriculture, agribusiness and food systems, bearing in mind climate and biodiversity issues. The results obtained were officially presented at the Finance Day organised by the COP26 Presidency. In 2021, as the host of the IDFC Climate Facility (2) , AFD continued to roll out support activities for its members. This allowed the IDFC to finalise, with the multilateral development banks, the update of the common accounting principles for mitigation finance; to continue to improve and facilitate annual reporting on green finance by improving how biodiversity is taken into account; to develop a mentoring programme among member institutions; to launch projects in order to adopt shared tools for analysing climate risks, recognising GHG emissions and classifying adaptation projects; to reinforce the IDFC’s capacity to access international climate finance by examining an IKI financing request (3) ; to ensure a significant presence of its members at COP26 through over 40 events organised at the IDFC pavilion; and to create the conditions necessary to pool efforts in order to have more influence in the international debate. AFD continues its collaboration with the Green Climate Fund (GCF). It was accredited in 2015, and benefited froma framework agreement in 2017. In 2021, the GCF’s Board approved new cofunding of $52.8M for the HYDROMET project, which aims to strengthen the resilience of the Indian Ocean States to climate change, via the improvement of ecosystem services. To date, six projects led by AFD have been co-financed by the GCF for a total amount of over €370M. New projects and programmes are under review, with a view to being presented to the Board of the GCF in 2022/2023. Partnership activities conducted by the GCF and IDFC also continued to support IDFC members in their accreditation process or to help recently accredited members to examine projects/programmes. AFD continued to focus on strategic dialogue with civil society organisations on climate change. It brought together, at the Partners Committee in the first half of 2021, French and international civil society organisations (CSOs) dedicated to climate, ministries and French think tanks and commercial banks, in order to present to them the challenges of both the mid-term review of the climate strategy and the mid-term review of the energy transition; the role of development banks in the international agenda for 2021; the methodological changes in climate finance; and the prospects for convergence between climate and biodiversity. In addition, this regular dialogue and the relationship of trust forged with civil society for the climate

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(1) https://financeincommon.org/sites/default/files/2021-01/FiCS%20-%20Joint%20declaration%20of%20all%20Public%20Development%20Banks_0.pdf (2) https://www.idfc.org/idfc-climate-facility/ (3) The International Climate Initiative Fund (IKI) is an EIB trust fund financed by Germany. Created in 2019, the IKI Fund aims to catalyse investments in ambitious projects to mitigate and adapt to climate change in emerging and developing countries. (4) https://www.mainstreamingclimate.org/ (5) https://www.mainstreamingclimate.org/mainstreaming-climate-to-align-with-paris/ (6) https://mooc-campus.afd.fr/enrol/synopsis/index.php?id=12

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2021 UNIVERSAL REGISTRATION DOCUMENT