The urgent need to tackle climate change, and ensure countries have access to adequate and predictable finance to do so, is unquestionable. But the reality for many nations in the global south is that current international climate finance flows do not match their needs. 

Following calls from the G7+ to ‘overhaul its business model to boost action on climate change’, the World Bank published a first iteration of its new Roadmap titled  "Evolving the World Bank Group’s Mission, Operations, and Resources” in January. This was updated after intense internal conversations, resulting in a document submitted in March to the Development Committee, a ministerial-level forum representing 189 member countries. 

But despite all the apparent action, even a cursory look at the Bank's record on climate - and its plans for the future - gives great cause for concern. 

According to the March document, the proposed provisional mission of the WBG would be: “to end extreme poverty and boost shared prosperity by fostering sustainable, resilient, and inclusive development.” While this seeks to incorporate climate considerations, the Roadmap does not address the continuing contradictions in its operations.

Firstly, despite being one of the world’s largest public lenders, the World Bank Group (WBG) has been a laggard on both providing climate finance and aligning with the goals of the 2015 Paris Agreement. For instance, while the Bank has committed to aligning its financial flows with the climate agreement, in reality it is years behind schedule, and will only align 100% per cent of its new operations from July 1st. With regards to its private sector arms, the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA), this will only be achieved by July 1st 2025 - 10 years after the historic Agreement was made. What’s more, the Bank Group’s Climate Change Action Plan - which sets out the corporate strategy - has been roundly criticised by civil society, which has also cast doubts on the data in the Joint MDB’s ‘climate finance’ reports, to which the WBG contributes. 

Secondly - and probably most concerning - the World Bank’s Roadmap reinforces the institution's reliance on leveraging private finance as a silver bullet to address development and climate needs. 

Commodifying the Climate Crisis 

The central driver of the Bank’s approach towards resolving the climate crisis places the  private sector as the key provider of finance. Greater action on climate change has already been used as an opportunity to intensify the Bank’s  Maximising Finance for Development (MFD) approach. Launched in 2017, MFD is a systematic and comprehensive effort to promote private sector development, which situates private actors, and particularly capital markets and investors, at the heart of development and, now, of climate action. 

A striking example of how the energy transition has become a channel for the Wall Street Consensus (WSC) - the mobilisation of private finance as a development priority -  is the idea that creating the space for the private sector to play a bigger role will be sufficient to fix the failures of capitalism (including huge profiteering from fossil fuels consumption). This  invites us to believe that the climate crisis can somehow be solved through the private sectors, when in fact they have contributed to the climate crisis . 

While the private sector - and particularly industry and fossil fuel companies - have a responsibility to help reverse the impact of the climate crisis, particularly in the global south,  an investment model which allows them to reap even more benefits through more derisking by the state, for instance by using blended finance, not only fails to solve the problem but in fact adds fuel to the fire. 

Is there any way forward? 

Progressive action such as penalising the private sector of the developed global north for failure to meet its carbon emission reduction, whilst simultaneously providing developmental space for developing countries to lead their progress towards sustainable goals, could be a step forward. Orienting the bank’s developmental model towards climate reparations would be yet another step in tackling key countries which have historically contributed to the climate crisis. 

But the  reality is that the current international finance system not only lacks the ability to hold the private sector accountable for its inequitable practices, World Bank policies have also contributed towards the climate crisis. Since the signing of the 2015 Paris Agreement, the World Bank has spent US$16 billion of project finance on fossil fuels.The Bank’s market-based involvement in the carbon market, specifically, the commercial nature of its Clean Development Mechanism (CDM) projects, has also been described as a  ‘serious conflict of interests’, allowing the Bank to make a commission from the climate crises whilst also exacerbating it. Given the consistent record of commodifying the climate crisis, it should come as no surprise that  anticipatory or early action support for climate change is also solely geared towards profits. 

Unfortunately, the evolution roadmap continues on this path, centering the WBG as a facilitator of the mobilisation of  private capital through de-risking strategies, such as blended finance, to enable private capital investment through public investments. Worryingly, while rich country governments - the main shareholders of the WBG - are pushing for a greater role of the WBG in climate action, they are falling behind on the U$S100 billion annual commitments on climate finance.   

The future (of climate finance) should be public 

Global south leaders have been increasingly calling for a transformation in the international financial architecture. So far this has resulted in the COP27 agreement on a Loss and Damage Fund, the Bridgetown Initiative  and the UNGA-adopted Vanuatu’s resolution for an International Court of Justice Advisory Opinion on Climate Change. Despite these active challenges from the global south and civil society organisations, the World Bank’s evolution roadmap is just a continuation of existing policies and practices, and unequal governance. 

If the Bank really wants to evolve it needs to move towards a gender-just, human rights-based approach that builds resilience and strengthens public climate finance. WB action on the climate crisis needs to ensure that climate action and finance follows the principles of ‘polluters pay’ and ‘common but differentiated responsibilities’, as developed countries have historically contributed the most to the current climate crisis. It should also be based on enforcing the global south’s right to self determination and a renewed focus on how a country’s needs intersect with its vulnerabilities, and how they compound each other. The Bank should implement more equitable governance structures and include local and indigenous knowledge on climate change, which will have a greater positive impact on communities.

Crucially, the Bank must prioritise public grants over private finance loans, and re-evaluate its private sector focus, given the problematic track record of this approach in development finance. Finally, the Bank must also design and implement a comprehensive monitoring and reporting framework that covers private finance and multilateral finance. In the face of intergenerational inequities, the Bank needs to start adopting more equitable economic practices to ensure all countries are able to achieve prosperity, while tackling the climate crisis.