The World Bank has officially expanded its mission to include climate change, while pushing ahead with reforms that could unlock additional funding and cheaper loans for green projects.
In his first major speech since taking office, President Ajay Banga said a set of measures to stretch its balance sheet could allow the bank to increase lending by up to $15.7 billion a year.
The extra funding would support the implementation of the bank’s new vision statement approved by its governing body on Thursday.
The historical objective to “end poverty” should now be achieved “on a livable planet”. The new mission will give the lender the formal mandate to tackle a whole range of global challenges, among which climate change is seen as the most urgent one.
Banga said this will widen the aperture through which the bank looks at its task in the future. “If you can’t breathe and cannot drink clean water, there is little point in eradicating poverty,” he added.
Year-long reforms
Announced at the lender’s annual meetings in Marrakech, Morocco, the changes come a year after a group of its biggest shareholders, led by the United States and Germany, called for its fundamental shake-up to deliver more climate finance.
The overhaul quickly picked up pace. Former chief David Malpass resigned early, after sparking an outcry with climate sceptic comments, and was replaced by Banga, a former Mastercard CEO, who promised far-reaching reforms.
Banga is seeking to create a “better and bigger” bank capable of plugging a few more of the huge gaps in the provision of climate finance to developing countries.
But a lack of appetite to inject fresh funds into its coffers directed the focus on financial tweaks to make the existing capital go further. The reforms mainly concern the International Bank for Reconstruction and Development (IBRD), the lending arm for middle-income countries.
Accounting tweaks
The first concrete step came in April when the bank lowered its equity-to-loan ratio from 20% to 19%, freeing up $4 billion a year.
The lender is also creating a programme of guarantees backed by shareholders, which would step in to cover potential losses if borrowers cannot repay their loans. The measure would offload some of the risk currently shouldered by the World Bank to its donors, allowing the bank to channel those reserves into more new lending.
Another option under development is the launch of a hybrid capital mechanism, which allows shareholders to inject new funds by investing in special bonds issued by the World Bank.
US Treasury secretary Janet Yellen at the World Bank annual meetings in Marrakech. Photo: World Bank / Franz Mahr
Taken together, this suite of tools could boost the bank’s lending capacity by $157 billion over the next decade, Banga said on Friday.
He added that the plans have been “met with enthusiasm and generosity”. But, crucially, their potential will only be realised if shareholders fork out the money.
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The US government favours the guarantees plan and wants Congress to approve $2.1 billion in new funding that could unlock $25 billion in new loans. Germany has become the first country to pledge 305 million euros ($321 million) of “hybrid capital”.
Cheaper energy loans
Another element of Banga’s blueprint is the extension to middle-income countries of the cheap loans that are currently exclusively offered to low-income ones. The concessional resources currently available “are insufficient to deliver on the new vision and mission”, a paper outlining the bank’s reforms said.
The rollout of clean energy in high-emitting countries is one of the primary areas the lender would be targeting with these measures.
“We’re investigating if we can reduce interest rates to incentivize exiting from coal as part of energy transitions,” said Banga, “and find ways to encourage a renewable energy transition by increasing concessional finance in the mix.”
A thermo-solar power plant supported by the World Bank. Photo: Dana Smillie / World Bank
Danny Scull, an analyst at E3G, said this is a welcome step as incentivising countries like India and Brazil to take out cheaper loans for climate action will benefit the whole world.
Amid all the optimism, the World Bank chief added words of caution on how far his organisation can go without external help.
An influential panel of experts commissioned by the G20 said in July that development banks need to triple their lending levels by 2030 if they want to make a serious dent in the trillions of dollars of climate finance needed by developing countries.
Appeals for more capital
“The World Bank is merely an instrument that reflects the ambition of our shareholders,” said Banga, “the progress we aspire to achieve requires our resources and capital to be commensurate with our vision.” In other words, governments need to inject more money into the bank to fulfill this new mission.
But support for a direct capital increase is limited. The UK is the only major Western country in favour of the idea, which is strongly championed by developing nations, China and India above all.
For the US and Japan – the bank’s biggest shareholders – these discussions prompt a headache. They would need to contribute most to a capital increase, if they are to avoid their percentage ownership of the bank being watered down, perhaps as the share of geopolitical rival China rises.
Private sector engagement
Among rich countries, the preferred solution is to get the private sector to stump up more money.
Banga agrees, saying the lender needs “the scale, resources, and ingenuity of the private sector”. But he also acknowledged that “meaningful, sustainable progress has evaded us” on that front.
To change that equation the World Bank has set up a forum with a group of CEOs from some of the world’s biggest companies.
Banga said the initiative is initially focused on increasing private investment in renewable energy and the energy transition in developing countries.
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Scientists have vowed to keep working on the next flagship set of reports for the Intergovernmental Panel on Climate Change (IPCC), after a political row over the timeline for their release saw its latest session suspended on Friday evening without agreement.
During the weekend, government officials and scientists alike expressed disappointment over the inability to reach a compromise before some delegates from developing countries and small island states had to leave the week-long meeting in Ethiopia to catch flights home.
The disagreement – which has persisted since early 2024 – turns on whether the three key parts of the AR7 assessment should all be published before the conclusion of the UN’s next Global Stocktake of global climate action, which is due to be completed in late 2028.
The IPCC issued a statement after the close of the session, saying that “key agenda items” – the timelines for the three AR7 reports, as well as the IPCC budget – remain open and under discussion. It said the IPCC’s plenary session and its deliberations on the pending agenda “will resume at the earliest opportunity”, giving no further details of when.
IPCC Chair Jim Skea told delegates in closing remarks that recent months had been some of the most turbulent for the climate science panel and that, if there were stronger words than “profound disappointment” he would use them, according to a summary published by the Earth Negotiators Bulletin (ENB). IPCC discussions happen behind closed doors.
IPCC scientists remained committed
In an open letter, issued on Monday, a group of nearly 120 scientists – from a total of 664 AR7 authors – said they “stand committed to continue working to deliver the AR7 reports in a manner that is rigorous, timely and inclusive, in line with our mandate to be policy-relevant”.
“An assessment that arrives after the decisions it is meant to inform cannot serve its purpose,” they emphasised. “The second Global Stocktake in 2028 is such a decision point, and the world should not have to face it without the IPCCʼs latest assessment.”
Europe, small islands and the least developed countries, plus many Latin American and developed nations, want the IPCC to meet this deadline, arguing that the findings from the UN climate science body are irreplaceable in the UN climate policy-making process.
However, around a dozen developing countries plus Russia have argued that the reports should come later in order to allow for greater research input from the Global South – something that, in their view, would make the findings fairer. They also claim that a shorter timeline would put excessive pressure on experts.
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The most vocal of this group at last week’s meeting were India and Saudi Arabia, according to the ENB summary and a developed country diplomat. Critics see this push for a longer timeline as an excuse to deprive government decision-makers of the latest science and ease pressure on emerging economies to raise their ambition, particularly on cutting emissions.
Commenting on last week’s meeting, France’s ambassador for climate negotiations Benoît Faraco said a broad coalition of developed and developing countries from all five continents, “united in their support for science and the timeline proposed by scientists”, had withstood pressure “from a few countries” seeking to slow down the process of adopting the IPCC reports.
He added that France would not back down and would “continue to fight tirelessly for science, protect the integrity of information, and convince our partners that without the best available scientific data, we will be less effective in tackling climate change and protecting our populations”.
Inclusivity proposal stalled
In a bid to unlock a solution for the AR7 timeline, countries discussed ways to improve the inclusivity of the IPCC’s work. One option put on the table was for the IPCC to expand its funding for delegates from developing countries to attend some or all of its sessions from one to two participants, according to the ENB summary and a delegate speaking to Climate Home News.
That would increase the costs for the IPCC to complete AR7 by up to a quarter, according to an assessment shared by the secretariat. The panel’s budget is under severe strain and its officials have warned that, without additional voluntary contributions, it risks running out of money before it can deliver on this assessment cycle.
Climate Home News understands that some of the IPCC’s traditional donors – which mainly include European countries, Japan and Australia – indicated a willingness to support funding for an additional developing country participant. But without an agreement over the budget or the timeline for the reports, that option was ultimately not adopted.
‘Disappointed and worried’
The three reports are managed by working groups that collate and draw overall findings from the latest scientific studies and data on the physical effects of global warming around the world, how to adapt to it, and pathways for cutting planet-heating emissions in order to meet the temperature goals of the Paris Agreement.
Winston Chow, an urban climate professor at Singapore Management University who co-chairs Working Group II on adaptation, wrote in a LinkedIn post that he was “disappointed and worried” for the IPCC authors who have worked “extraordinarily hard” to assess the relevant climate science over the past two years.
He said he shared their concern that “the rigour, time and goodwill they’ve invested are now being put at risk by the Panel’s stalemate”.
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For Working Group II, a meeting for 250 experts writing that report is scheduled for January 2027, followed by the approval of a special report on cities and climate change in Singapore next March.
But because the IPCC’s budget has not been confirmed due to uncertainty about the AR7 schedule, travel support for those researchers is at risk, wrote Chow. “If they cannot participate, our assessments will lose vital expertise, perspectives and scientific breadth, and the collective effort of our authors will be undermined,” he warned.
Scientific work continues
Despite the political holdups, he – together with French climate scientist Robert Vautard, co-chair of Working Group 1 – agreed with IPCC head Skea who told the IPCC’s closing session on Friday: “The engine room of the IPCC is working, and it’s healthy.”
Vautard commented in a separate post on LinkedIn after it ended: “The boat is at full steam.” Working groups I and II are due to start revising the first drafts of their reports, while Working Group III on reducing emissions is finalising its first draft which will be out soon, he wrote.
“The most exciting two years of the cycle are ahead, for the authors. The momentum in the engine room is here and now. Trust the engine room!” he added.
The IPCC and some scientists report that progress has been made towards achieving an equitable balance of authors from the Global North and the Global South.
The group of researchers who signed the open letter on Monday noted that “inclusivity is at the heart of how we work”, with author teams bringing together experts from developed and developing countries with diverse backgrounds and at different stages of their careers.
Plea to overcome political differences
The signatories include several scientists from some of the countries opposed to the alignment of all IPCC reports with the Global Stocktake.
“We are committed to an assessment in which the knowledge, experience and priorities of every region are fully reflected, a commitment we share with the leadership of the IPCC.
Equity is built into how our assessment is being drafted,” they added.
They appealed to governments that make up the IPCC “to overcome their political differences and work together as we do as a global scientific community, so that we can deliver the IPCC reports the world needs to hear”.
In a statement published on Monday, IPCC chair Skea said reaching consensus on the schedule for the reports is “vital”. He added that the assessments provide authoritative scientific evidence to inform national climate policies, strengthen adaptation and resilience and support access to climate finance, as well as helping communicate the scale of the climate crisis and the urgency of efforts to tackle it.
The post IPCC scientists vow to press on with climate reports despite political deadlock appeared first on Climate Home News.
IPCC scientists vow to press on with climate reports despite political deadlock
An Lambrechts is a biodiversity politics expert at Greenpeace International with extensive experience in biodiversity-related multilateral negotiations. She is the head of the Greenpeace delegation at the Convention on Biological Diversity (CBD) COP17 happening in Yerevan, Armenia.
In 2022, COP15 delivered the landmark Kunming-Montreal Global Biodiversity Framework to halt and reverse biodiversity loss by 2030. With COP17 starting in Yerevan, we are now halfway to the deadline, and according to the first Global Review of progress, countries are not on track to meet the biodiversity targets, and implementation must accelerate fast.
One of the main findings of the Global Review is that funding falls far short of the scale needed to halt and reverse nature loss. But the crisis facing the world’s biodiversity is not an absolute scarcity of capital – it is a profound public policy distortion.
The global economy currently spends roughly $30 destroying nature for every single dollar invested in its protection. According to a report from the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services, a staggering $2.4 trillion is spent in public subsidies for fossil fuels, agriculture and water use, while global investment in biodiversity conservation and restoration stands at a mere $220 billion.
Countries urged to ramp up “insufficient” nature policies at COP17
Yet, discussions about how to close the biodiversity finance gap continue to claim that salvation lies in mobilising private capital, scaling offsets and “derisking” investments in nature. This is a fundamental misunderstanding of both the nature of ecological stewardship and of the global financial architecture.
Biodiversity conservation is not a speculative investment portfolio – it is the foundation of human survival. The health of our planet is a non-monetisable, non-excludable public good. Expecting profit-seeking private capital to protect nature perpetuates the structural drivers of ecosystem destruction in the first place.
But if private market mechanisms cannot save biodiversity, where will the necessary public resources come from?
Money going to the wrong places
The answer lies in recovering the vast public wealth currently drained by cross-border tax abuse, financial secrecy and corporate impunity. Finance and environment ministers meeting in Yerevan must give a strong political signal that, to avert ecological breakdown, countries need to take swift action to reform global tax rules, eliminate harmful public subsidies and cancel unsustainable sovereign debts for the public revenues to end up where they belong.
Extractive sectors such as industrial agriculture, fishing, timber and mining continue business-as-usual, often heavily subsidised by public treasuries, while voluntary carbon and biodiversity offset markets pose a serious risk to nature conservation. Offset schemes have delivered only a negligible fraction of the funding needed to preserve ecosystems, allowing industries to continue with their destructive business-as-usual practices.
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In advanced economies, public funding often actively undermines biodiversity. In Europe, over €5.3 billion in public subsidies is funnelled annually into intensive forest biomass harvesting under renewable energy directives, degrading primary forest ecosystems and undermining long-term climate resilience. Pleading with private investors to fill a “finance gap” while pouring billions into ecological destruction is an exercise in futility.
Developing countries struggle with debt burden
For developing countries, reliance on private finance is further compounded by a crushing sovereign debt crisis. In 2024, public debt in developing economies reached record levels, with net interest payments alone absorbing $921 billion. A record 61 developing countries now spend more than 10% of government revenue on foreign debt service, with many climate-vulnerable nations spending twice as much servicing external debt as they receive in climate and biodiversity finance combined.
This burden acts as a structural driver of ecosystem destruction. Under pressure from external creditors and international financial institutions to avoid default and secure foreign exchange, governments are routinely forced into austerity measures and pushed to expand raw commodity exports into pristine biomes.
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The current negotiations for a United Nations Framework Convention on International Tax Cooperation (UNFCITC) also offer a way forward. An estimated $492 billion in tax revenue is lost every year to offshore tax havens. Multinational corporations account for around $348 billion of this total by shifting profits away from the countries where real economic extraction and environmental degradation occur.
In the mining sector alone, developing nations lose tens of billions annually to corporate tax dodging. Furthermore, international financial secrecy shields environmental criminals, with illicit financial flows from illegal logging draining between $51 billion and $152 billion annually.
At COP17, leaders must seize the opportunity to build a bridge between the two conventions and enhance cooperation. Governments must put the world on a firm path to securing predictable, sufficient, sovereign public finance for biodiversity conservation. It’s the only path to a restorative, rights-based future for people and the planet.
The post Protecting nature is a public duty, not a Wall Street profit opportunity appeared first on Climate Home News.
Protecting nature is a public duty, not a Wall Street profit opportunity
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