Pressure from several countries has pushed the World Bank to put the climate crisis in sharper focus and reshuffle its leadership just weeks after drafting an “evolution roadmap” to reform operations. But critics say its proposals are “mostly a disappointing mix of navel gazing and finger pointing,” with urgently due financing flowing far too slowly.
“It is a roadmap to a ‘roadmap,’ laying out a too timid and too slow pathway toward the critical reforms that are needed,” writes the U.S.-based National Resources Defense Council (NRDC). While the various mechanisms the Bank describes in the paper are undoubtably doing decent work, NRDC adds, “it is nibbling around the edges when what is needed is fundamental reform of the Bank’s overall operations to be fit for 21st century challenges.”
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Formed after the Second World War to fund the rebuilding of Europe, the World Bank has since shifted its focus towards ending extreme poverty and promoting economic growth. It raises money by borrowing on the international capital market, and its largest shareholder is the U.S. government, Climate Home News explains.
Following a push led by Barbados Prime Minister Mia Mottley last year, several countries called for reform of the World Bank and the International Monetary Fund (IMF), asking them to integrate climate considerations into their goals. Others, like BlackRock CEO Larry Fink, have said such multilateral development banks (MDBs) could help facilitate the global transition by acting as insurers that reduce risks for private investors.
“We need global solutions and international organizations that are willing to mitigate the risks of investing in emerging markets,” Fink said in a 2021 speech. Bloomberg reports that while there is some debate about using MDB shareholder funds to de-risk private investment, financial experts also point out that private funding is crucial to delivering a transition in the time available to avert global catastrophe.
Because of the World Bank’s prominence in international development finance, its policy changes could have an impact. But under the leadership of President David Malpass—once called a “climate denier” by former U.S. vice president and climate activist Al Gore—it has been slow to properly address the climate crisis and has “continue[d] to fiddle while the developing world burns,” says Selwin Charles Hart, Special Adviser to United Nations Secretary-General António Guterres.
Its new proposals include lending more money and shifting focus from the world’s poorest countries—which account for only 2% of global emissions—to low- and middle-income countries that are responsible for 60%, says Climate Home News. It also proposes to measure financial needs partly on vulnerability to the impacts of climate change.
“This would make it easier for climate-threatened nations which aren’t among the world’s poorest, like the Maldives, to access World Bank funds.”
But NRDC says the paper’s proposals “are mostly a disappointing mix of navel gazing and finger pointing.” The Bank repeats its overused refrain that it needs more funding, when what it really needs is to reform its core operations, integrate climate “throughout its work,” and align its practices with the 2015 Paris Agreement.
Moreover, the bank’s implementation timeline won’t deliver any results until 2024. “This is simply too slow,” NRDC says. “The pandemic, energy, food and debt crises are devastating lives and livelihoods now.”
Proposals to boost financial capacity are not expected until mid-December, NRDC adds, and the Bank doesn’t plan to release a technical note on amending its equity-to-loan ratio until later this year, even though such actions have already been taken in the past. It also neglects to address its current financing of fossil fuel projects that are helping to drive the climate crisis.
“The World Bank needs to seriously up its game to help tackle the multiple crises the world is facing, with addressing climate change prime among them,” NRDC says.
The Bank has also made leadership changes to “more effectively address mounting development and climate challenges,” reports Devex.
Anna Bjerde—who has been with the agency for three decades and led its work in Europe and Central Asia—was named the new managing director of operations, replacing Axel van Trotsenburg, who has been promoted to senior managing director. Bjerde will be in charge of implementing changes that result from the evolutionary roadmap.
“While part of her new job is addressing global, or ‘borderless,’ challenges such as climate change, she wants the lender to take account of ‘each country’s development trajectory’ and aspirations and not seek a one-size-fits-all solution,” Devex writes.
