Our upcoming Spring Meetings will focus on Reshaping Development for a New Era – this is an excellent opportunity to take stock of progress being made to tackle the many challenges facing global development, including climate change.
From phasing out fossil fuels, to developing new diagnostics that drive climate action at the country level, to issuing innovative sustainability bonds, to ensuring our operations are Paris-aligned, our ambition is to meet the double test of being sharply focused on our core development mandate of poverty reduction and tackle at the same time the most pressing global challenges of which climate is perhaps the most prominent. All of this requires effective partnerships with the countries affected, the private sector, and development partners.
We have been consistently scaling up our climate action: the World Bank – both IBRD and IDA – delivered ~$29 billion in climate finance in 2022.
With this finance, we have been moving from greening projects to greening entire economies, scaling up renewables, supporting fossil fuel subsidy reforms, investing in large-scale forest management programs, reducing methane in sanitation and waste, broadening access to clean cooking, fostering climate-smart agricultural practices, and helping clients to tap green value-chains. We are helping to transform cities to be cleaner and infrastructure to be greener, strengthening coastal area resilience, and supporting clients to green the financial system and tap growing carbon markets.
At the same time, we have transformed our investment approach, helping to close coal-fired plants like we are doing with the Komati project. In parallel we have been championing the renewable agenda: in fact, renewable energy is always the World Bank’s first resort when considering energy investments. In the last few years, the World Bank has invested more than $8 billion in clean energy, renewable energy access, and related infrastructure, and catalyzed over $20 billion in private investments in renewable energy generation capacity . Meanwhile, we are helping around 48 million people to access cleaner more efficient cooking and heating.
As a borrower, we issued the world’s first green bond in 2008, creating a blueprint for sustainability across markets. Today, we are the single largest issuer of sustainability bonds globally, mobilizing ~$50 billion each year from private investors to finance activities that support the SDGs. We continue with innovations in the capital markets, with the world’s first wildlife conservation bond in 2022, which connected investors directly to wildlife protection outcomes in South Africa, and an emission reductions-linked bond in 2023, which helped finance water purifiers for schools in Vietnam. Our catastrophe bonds provide insurance against natural disasters to boost financial resilience in countries like Jamaica, Philippines and Mexico.
At the project level, we have been working hard to sharpen our climate tools. We have a suite of Climate and Disaster Risk Screening Tools, which help to ‘climate proof’ every project by better accounting for future conditions so that our support to countries remains resilient over time. We do GHG accounting for all projects in relevant sectors, which helps us to design lower-carbon projects and quantify the emissions from World Bank financed operations. We also measure the shadow price of carbon in the economic analyses of such projects, to better understand the costs and benefits of investments and alternatives. Every day, hundreds of Bank staff around the world apply these tools to support our clients integrate climate and development on the ground.
Through these efforts, we want to remain at the frontier of knowledge and innovation, as part of the global effort to tackle catastrophic climate change.
The most recent step in our journey has been the launch of the Country Climate and Development reports – or CCDRs. Last year, we developed these new reports to bring together the latest data and analysis to prioritize the most impactful actions that can deliver on development in the context of a changing climate. The IMF is also using these CCDRs as analytical underpinning from their own Resilience and Sustainability Trust lending, as are other development partners, demonstrating how CCDRs are already shaping climate action around the world. We are now working on CCDRs for a further 20 countries.
The next step on this journey is Paris Alignment. We have long been committed to the goals of the Paris Agreement. And as we agreed in our Climate Change Action Plan, as of July 1, we will vet every Bank operation to ensure its alignment with the goals of the Paris Agreement. While I’m confident that the vast majority of our operations are already Paris-aligned, this step is about assurance – i.e. putting in place internal processes and systems to assess and show that every financing flow is Paris-aligned.
To do so, everybody including the World Bank Group, has to align and do its share – and the large emitter countries have a special responsibility to step up their efforts to decarbonize.
For our part, we have worked in partnership with other multilateral development banks (MDBs) to develop joint MDB Paris Alignment approach, which will be disclosed soon. We have brought those principles home and additionally developed methodologies for each type of instrument we offer. We have also prepared Sector Notes to guide teams on how to conduct assessments in every sector we work. We have been rolling out thousands of hours of training for our staff around the world. This is what it takes to make climate part of our DNA in everything we do.
Today, we have disclosed our Instrument Methods and will soon disclose our Sector Notes. Going forward, we will carefully document our experience and continue sharing what we have learned. Our website will also provide a mechanism to receive feedback. In time, we will update our systems and processes and feed lessons back to the MDB group.
To sum up,This mindset is going to guide us in our operations, in our partnerships, and ultimately our ambition to end poverty and green the world. The climate is changing, and so are we.
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