The current global warming observed worldwide, and the resulting climate change it causes, are the consequence of increased concentrations of greenhouse gases (GHG) in the Earth's atmosphere. Science clearly states that: “It is unequivocal that human activities are causing climate change, making extreme weather events—including heatwaves, heavy rainfall, and droughts—more frequent and severe. The changes we are experiencing will intensify with further warming. Unless there are immediate, rapid, and large-scale reductions in greenhouse gas emissions, limiting warming to 1.5°C will be beyond reach” (IPCC, 2021).

CABEI recognizes that the impacts of climate change and climate variability pose a significant threat to economic and social development. In this regard, CABEI has demonstrated its commitment to climate action and has supported the agendas of its member countries in addressing the adverse effects of climate change.

Within this context, and in line with international best practices, CABEI has committed to incorporating methodologies for quantifying net annual reductions in GHG emissions, thereby contributing to operations that promote renewable energy, sustainable agricultural systems, resilient transport and infrastructure, and the integration of energy efficiency throughout the project life cycle.

To support the quantification and monitoring of GHG emissions, CABEI has developed a dedicated tool called NeutralBank, a proprietary software designed to measure GHG emissions based on the carbon footprint calculation tool developed by the French Development Agency (AFD). NeutralBank enables the estimation of a project’s climate impact using operational activity data available during project formulation and execution/operation. Quantifying GHG emissions represents a critical first step toward setting effective emissions reduction targets.

Similarly, the Environmental and Social Strategy 2020–2024 includes the provision of technical and financial resources to promote the transition toward low-carbon and climate-resilient economies. This includes the development of green infrastructure, clean energy, and sustainable production systems, among other initiatives. In this regard, in 2023, CABEI approved USD 1,793.9 million for climate change mitigation and adaptation operations, representing 50% of the Bank’s total approvals for the year and generating positive social impacts on the quality of life of people in the region. As a result of the climate change mitigation-related approvals in 2023, an annual reduction of approximately 1.5 million metric tons of carbon dioxide equivalent (tCO2e) is expected.

Analysis of Climate Information

The Country and Projects Office is responsible for collecting operational information and the necessary supporting documents for the environmental and social analysis. This includes gathering existing information to perform a preliminary review and estimation of Greenhouse Gas (GHG) emissions and vulnerability to climate change in operations where GHG calculation can be performed, depending on the nature of the intervention and its mitigation profile.

For an operation to proceed with a GHG estimation, it must comply with the characteristics established in the Environmental and Social Risks Identification, Evaluation and Mitigation System (SIEMAS). In this regard, the Climate Change Specialist, with the support from an Assessment Analyst from the Environmental and Social Sustainability Office (OSAS), will determine the operation’s susceptibility to climate risks, based on the analysis carried out in the preparation phase by the Country and Project Office, the Environmental and Social Sustainability Office and the information provided by the client.

This assessment methodology considers both current and projected climate risks, integrating data on geographical exposure, climate scenarios, and sectoral vulnerability to inform project design and mitigation measures. It also considers how technical characteristics of the operation may exacerbate or reduce environmental and social vulnerability.

Application of Carbon Footprint Calculation

The Carbon footprint calculation applies to operations that are estimated to emit 25,000 tCO2e/year or more. Among these, the following sectors stand out:

  • Energy from conventional sources
  • Rural electrification
  • Road infrastructure
  • Transport
  • Large infrastructure complexes
  • Industrial and agro-industrial processes
  • Land use changes
  • Livestock production
  • Cement production

This also applies to mitigation operations that aim to reduce or absorb GHG emissions compared to the reference scenario. These include sectors such as:

  • Renewable energy
  • Energy efficiency and cleaner energy production
  • Solid waste management
  • Wastewater Treatment
  • Clean transport (electric vehicles, hybrids, etc.)
  • Landscape restoration and forest conservation
  • Agroecology and sustainable forestry

Each eligible project must apply a consistent methodology for estimating net emissions or reductions, based on recognized international standards and tools, including sector-specific emission factors.

Exclusion from Carbon Footprint Calculation

The following types of operations are excluded from carbon footprint calculations due to their minimal impact on GHG emissions and lack of tangible climate actions: budget support, financial intermediation, technical studies, Development Policy Operations, Programme for Results, and similar activities in sectors such as health, education and citizen security, including financing for local governments and capacity-building projects.

However, to ensure operations align with national and institutional climate strategies, even if excluded, a climate screening process is still conducted for these operations. This process helps identify potential adaptation measures that can be incorporated into the Project SIEMAS Plan or Loan Contract.

a. GHG Emissions Calculation

The quantification of GHG emissions focuses on Category A and B operations that are expected to emit or are already emitting 25,000 tCO2e/year or more, as well as those designed to reduce or absorb GHG emissions relative to the reference scenario. The calculation must be performed during project preparation, using CABEI’s NeutralBank application and will be one of the elements of the environmental and social analysis carried out by the Sustainability Office prior to project approval.

For operations emitting 25,000 tCO2e/year or more, the following applies:

  1. If the scope and definition of the operation is clear, emissions must be calculated following the GHG Protocol,[1] covering scopes 1 and 2 (mandatory).  Scope 3 emissions calculation is optional.
  2. If the scope and definition of the operation is less defined, emission can be calculated using the 2006 Intergovernmental Panel on Climate Change (IPCC) Guidelines for National Greenhouse Gas Inventories.

The GHG calculation must include the seven gases required by the United Nations Framework Convention on Climate Change (UNFCCC): carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), nitrogen trifluoride (NF3). Emission must be reported in tCO2e/year to ensure standardization and comparability.

For operations where carbon footprint is required, the Environmental and Social Risks Identification, Evaluation and Mitigation System (SIEMAS) Plan must include:

  1. A recommendation to publicly report emissions for operations emitting over 25,000 tCO2e/year.
  2. A condition to publicly report GHG emissions (combined emissions of Scopes 1 and 2) and the GHG efficiency ratio for operations emitting over 100,000 tCO2e/year.

Where applicable, third-party verification or assurance of the emissions data may be encouraged to enhance transparency and reliability.

b. Climate Risk Analysis

For operations where carbon footprint calculation is required and/or those considered highly climate susceptible, the formulation must include a climate risk assessment, which should answer the following questions[2]:

  • What are the current and anticipated climate risks?[3]
  • Does the client have plans, processes, policies, or systems in place to manage these risks?
  • Is the operation compatible with the host country's national climate commitments? [4]

Category A and, where applicable, category B operations with high climate susceptibility should also include climate risk assessment focused on physical climate risks (e.g., floods, droughts, heatwaves).

For operations where the combined Scopes 1 and 2 emissions are equal to or greater than 100,000 tCO2e/year, the climate risk assessment must also consider transition risks, including:

  • Policy and regulatory changes
  • Market and reputational shifts
  • Technological disruptions
  • Alignment with the Paris Agreement and the Long-Term Low Greenhouse Gas Emission Development Strategies (LT-LEDS) [5] of the host countries, where available.

In addition, Scope 1 analysis must also include an evaluation of technically and financially viable low-carbon alternatives and provide justification in cases where such alternatives technologies were not selected.

Integration into ESG and Governance Frameworks

The climate-related assessments described above are fully integrated into CABEI’s Environmental and Social Risks Identification, Evaluation and Mitigation System (SIEMAS) and supported by the NeutralBank application for centralized reporting, traceability, and performance tracking.

The Environmental and Social Sustainability Office (OSAS) is responsible for ensuring consistency and institutional oversight, using GHG emissions data and climate risk evaluations to inform decision-making across project cycles and ensure ESG alignment.

This approach reinforces CABEI’s commitment to the Sustainable Development Goals (particularly SDG 13), the Paris Agreement, and best practices in sustainable finance, contributing to transparent, accountable, and climate-resilient development outcomes.

[1] The GHG Protocol is based on a globally standardized, comprehensive framework for measuring and managing greenhouse gas (GHG) emissions from operations. Available at https://ghgprotocol.org. The methodology is cross-sectoral and categorizes emissions into three scopes:

  • Scope 1: direct emissions. Fossil fuel consumption, enteric fermentation, manure management, fertilizers, biogenic waste, and fugitive emissions.
  • Scope 2: indirect emissions. Consumption of electricity purchased from the national grid.
  • Scope 3: indirect emissions. Goods and services purchased, fuel extraction, waste generated, use of products sold, capital goods, upstream transportation and distribution, employee posting, business travel by air, processing of products sold, transportation and distribution of products, and end-of-life treatment of products sold.

[2] Ref. Guidance Note: On Climate Change Risk Assessment (equator-principles.com)

[3] Climate risk analysis, according to the TaskForce on Climate Related Financial Disclosure (TCFD), focuses on two main categories of climate financial risks:

  • Physical risks: result of the effects of climate change on activity.
  • Transition risks: result from the impacts of a transition to a low-carbon economy.

[4] National climate commitments refer to the targets defined by countries to the UNFCCC for climate change adaptation, mitigation and contained in their Nationally Determined Contributions (NDCs) or National Adaptation Plans (NAPAs).

[5] Under the Paris Agreement, countries should strive to formulate and communicate Long-Term Low Greenhouse Gas Emission Development Strategies (LT-LEDS). The LT-LEDS are aimed at achieving decarbonisation and promoting carbon neutrality by 2050.