AFD Sustainability and Climate Finance Standards (seed)

Purpose
Sustainability and climate finance reference for AFD proposal design. Not an official document.

Sustainability requirements
AFD requires projects to demonstrate sustainability across three dimensions:

1. Institutional sustainability
- The project's outputs should be embedded in national or local institutions.
- Government counterpart must demonstrate ownership and commitment.
- Regulatory or policy framework must support continuation.
- Capacity of local institutions to manage and maintain project results.

2. Financial sustainability
- Recurrent costs of maintaining outputs must be covered post-project.
- Municipal projects must show path to own-source revenue coverage.
- Social tariff mechanisms for water and energy must be viable.
- Domestic financing (national budget, local government) should be progressively substituted.

3. Environmental sustainability
- Projects must not create negative environmental externalities.
- Environmental and Social Impact Assessments (ESIA) required for infrastructure.
- Climate resilience of infrastructure (design standards adapted to future climate scenarios).
- No-net-deforestation commitment for land-use-affecting projects.

AFD climate finance standards
AFD is a major climate finance institution (over €5 billion/year to climate).
Projects must be classified using the Rio Markers system:
- Mitigation marker: for projects reducing GHG emissions.
- Adaptation marker: for projects reducing vulnerability to climate impacts.
Projects can hold both markers simultaneously.

Climate finance eligibility criteria:
- Mitigation: renewable energy, energy efficiency, sustainable transport, REDD+ forestry, low-carbon agriculture.
- Adaptation: climate-resilient infrastructure, early warning systems, climate-smart agriculture, coastal protection.

Indicator standards for climate outcomes
- GHG tonnes avoided (mitigation projects): specify emission factor source.
- Number of people with improved climate resilience (adaptation projects): specify baseline exposure.
- Hectares under sustainable land management.
- Megawatts of renewable capacity installed.
All climate indicators must be disaggregated by sex where beneficiary-level data is collected.

Gender and climate nexus
AFD requires analysis of gender-differentiated climate vulnerability:
- Women typically have less access to climate information, finance, and inputs.
- Agricultural adaptation measures must address women's land rights and extension access.
- Urban adaptation must consider women's mobility constraints and safety.
- WASH improvements have disproportionate time-saving benefits for women and girls.
