5 ways the World Bank’s climate action plan could go further

By Gaia Larsen, Carter Brandon, Valerie Laxton and Carolyn Neunuebel 

The recent 2021 World Bank Group/International Monetary Fund spring meetings took place during challenging times. The COVID-19 pandemic has caused loss of life and exacerbated global poverty and inequality, while draining governments resources. Meanwhile, the impacts of climate change are starting to be felt on a broad scale, resulting in the loss of homes, crops and livelihoods. The year 2020 was tied for the hottest on record and boasted, among other things, a record number of destructive storms crossing the Atlantic. On top of the long-lasting economic effects of the pandemic, the impacts of climate change are poised to only get worse.

Countries need to take decisive action to address these interlinking crises. And the World Bank Group has an important role to play, providing tens of billions of dollars in finance annually ($77 billion in 2020) to public and private sectors in low- and middle-income countries (LMICs) around the world and as a source of technical assistance and expertise. Right now, the World Bank Group is finalizing an updated Climate Change Action Plan which lays out how its constituent parts — including the World Bank, International Finance Corporation (IFC), and Multilateral Investment Guarantee Agency — will act on climate change mitigation and adaptation from now through 2025. The Action Plan is an important opportunity for these institutions to signal to the world that they are ready to be leaders in climate action and to support others in their quest to be the same.

The World Bank Group’s systematic approach to climate change underscores the importance of fundamentally transforming economies to place them on a sustainable track. The World Bank and IFC will be a crucial source of finance for governments and private companies over the next five years as they move beyond the battle against the pandemic and into the growing fight against climate change. However, as it currently stands, the draft Action Plan announced in a statement by President Malpass does not go far enough.

Drawing on our previous analysis of climate change and the multilateral development banks, we suggest the World Bank Group could do more to embrace the following five points in its plan:

1. Commit to an emissions cap; 
2. phase out finance for fossil fuel; 
3. prioritize climate resilience; 
4. measure progress better; and 
5. enable countries to create projects that support climate goals.