Groups urge World Bank to ‘dramatically increase’ climate investment and action

October 17, 2022

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WASHINGTON — Leading organizations presented a 5-point reform plan to World Bank Group leaders calling for a big increase in its financing for climate action. The plan includes increased funding for climate protection and adaptation, support and provision of climate capital to developing countries, shifting billions of dollars from fossil fuel projects to mitigation and adaptation, and the implementation of innovative strategies on a larger scale to deal with the climate crisis.

“As the climate crisis continues to leave traces of destruction on the planet, the World Bank is in a position to alleviate suffering and create opportunity, but only if it scales up its climate action,” said Jake Schmidt, Director main strategy for the international. Climate at the NRDC (Natural Resources Defense Council), which joined others on the 5-point plan. “The World Bank could free up tens of billions of dollars each year if it acted more assertively to fund climate change projects. The need for such financing is great – for clean energy, adaptation, mitigation – and the World Bank is sitting on capital that could make a real difference to people’s lives and livelihoods.

The groups sent their 5-point reform, “Refresh the World Bank Group for Climate Action” to shareholders and World Bank officials, among others.

“IMF and World Bank shareholders must seize the opportunity to dramatically increase the quantity (more dollars) and quality of lending (aligned with Paris, with no exceptions for fossil fuels). These institutions need new modern tools and approaches to help the poorest countries, trapped in debt, access finance after relentless shocks to their economies,” said Claire Healy, Director of E3G US: “There is a winner- a winner if we can increase financing for developing countries to build clean energy systems and adapt to warmer climates.Shareholders must act as shareholders and demand that their equity be better used.

Better climate finance from the WBG (World Bank Group) has an opportunity to help address several challenges the world is facing in efforts to tackle the climate crisis. These reforms could contribute to:

  • Increase global climate finance at a time when additional resources are desperately needed. Climate finance could increase by more than $13 billion per year in 2025 if the WBG’s climate goal is increased to 50% of its overall financing. This amount could be increased by additional tens of billions if the overall financing capacity is increased by the implementation of the reforms identified in the revision of the Capital Adequacy Framework (CAF).
  • Delivering more climate finance for poorer countries that struggle to access climate finance through other channels. Increasing global climate finance could significantly increase the amount of resources available to the world’s poorest countries and people, given the share of this finance that goes to International Development Association (IDA) countries. .
  • Increase funding for adaptation actions. Adaptation financing could increase by more than $5 billion per year if the WBG climate target is increased and by an even larger amount if overall financing capacity is increased;
  • Move the billions of funding that the WBG provides to support fossil fuel projects aimed at climate change mitigation and adaptation. Since the adoption of the Paris Agreement, the WBG has provided more than $14 billion for fossil fuel projects at a time when scarce resources must be directed to helping countries mobilize more renewable energy and energy efficiency, adapt to the impacts of climate change and stimulate other strategies to combat climate change while reducing poverty.
  • Create more opportunities to trigger large-scale, transformative and innovative strategies. Using its financial clout and the tools at its disposal, the WBG could play a leadership role in supporting countries’ energy transitions, large-scale adaptation strategies, market-transforming interventions across multiple jurisdictions, and innovative financing structures that help attract private finance. .

“The World Bank can — and should — be a climate champion, but it has a lot of work to do first,” said Kyle Ash, director of policy at the Bank Information Center. “Some actions it must take to meet its commitment to 100% alignment with Paris by July 1, 2023 include: removing all fossil fuel investments, involving stakeholders in project design , full disclosure of how it calculates climate co-benefits, and a GHG-neutral portfolio.

The five reforms of the “Refresh the World Bank Group for Climate Action” are as follows:

1. Do better on climate finance. At a time when fiscal space is tight on all fronts, the World Bank should increase the quality and quantity of its overall climate finance, while strategically leveraging scarce resources. It should:

  • increase the target share of its climate finance from 35% to 50% by 2025.
  • provide high quality climate finance that respects human rights.

2. Achieve Paris alignment: faster, credible, comprehensive, inclusive and transparent. It is also essential that all World Bank financing – not just that which counts as climate finance – is aligned with global ambitions to keep temperatures to 1.5°C and support efforts to address climate change. impacts of climate change. The World Bank should:

  • Exclude all fossil finance, not just coal and upstream oil and gas, by FY23, except in rare circumstances where credible alternative analysis transparently and robustly demonstrates that carbon reduction needs poverty cannot be met with a renewable energy, energy efficiency or energy storage option and does not create a fossil fuel lock-in. This should also apply to investments that support internal combustion engines.

3. Significantly increase the investment and the quality of its adaptation support. Improving the overall lending capacity and climate finance target would significantly increase the amount of resources for adaptation given that the World Bank is already a major financier of adaptation. The bank must:

  • provide adaptation finance on highly concessional terms, including revising concessional finance eligibility criteria to include a specific exception for climate vulnerability for adaptation projects;
  • mobilize investments for large-scale, locally-led adaptation strategies aligned with national strategies
  • provide more support in the form of technical assistance for adaptation;
  • integrating adaptation into other strategies and sectors.

4. Reform the incentive structure so that management and staff these short-term goals while laying the groundwork for the WBG to become a leader in climate finance for decades to come.

5. Increase the overall lending capacity of the World Bank. Through the implementation of one or a group of recommendations from the “G20 MDB Capital Adequacy Framework (CAF) Review”, the WBG could increase overall lending capacity by tens of billions dollars a year, which could be spent on pressing development needs, including climate change. The overall WBG climate lending capacity should:

  • Be increased by shareholders to release additional tens of billions of global financing capacity
  • Demonstrate leadership to convince other MDBs to implement CAF recommendations.

In addition to the NRDC, others supported the recommendations: E3G, Bank Information Center, AbibiNsroma Foundation, African Coalition on Green Growth, Brighter Green Center for Financial Accountability, India, Center for International Environmental Law (CIEL), Climate Action Network Canada , ECCO, the Italian Think Tank on Climate Change, Emmaus International, Federation of Community Forestry Users, Nepal (FECOFUN), Foreign Policy for America, Fundación Ambiente y Recursos Naturales (FARN) – Argentina, Germanwatch, Global Citizen, Jamaa Resource Initiatives, Pennsylvania Interfaith Power & Light, RMI (Rocky Mountain Institute), Southern Africa Climate Change Coalition, Union of Concerned Scientists and Zimbabwe Climate Change Coalition.

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The NRDC (Natural Resources Defense Council) is an international non-profit environmental organization with over 3 million members and online activists. Since 1970, our lawyers, scientists and other environmental specialists have worked to protect the world’s natural resources, public health and the environment. The NRDC has offices in New York, Washington, DC, Los Angeles, San Francisco, Chicago, Bozeman, MT and Beijing. Visit us at www.nrdc.org and follow us on Twitter @NRDC.