The World Bank has scrapped its headline climate finance target under pressure from the Trump administration, but experts believe the survival of its wider climate programme should preserve support for clean energy and resilience in developing nations.
Following tense negotiations between its government shareholders, the global lender announced this week it would extend its Climate Change Action Plan (CCAP) while “retiring” its commitment to direct 45% of its financing to projects with climate benefits – a target it has already met.
“It could have been a lot worse,” said Danny Scull, a senior policy advisor at think-tank E3G. “I would have loved to see the most ambitious outcome possible, but it is far less likely we’ll see a scenario where the bank all of a sudden reverses its current trajectory and starts delivering less on climate,” he added.
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Introduced in 2021, the CCAP has been credited with overhauling the World Bank’s approach to climate finance after years of criticism over the development finance institution’s lukewarm support for cutting planet-heating emissions and building resilience to extreme weather and rising seas.
Since the CCAP began, the World Bank’s climate finance nearly doubled to $39.2 billion in 2025, with 48% of its financing showing climate “co-benefits” and exceeding the target first set at COP28.
US attack partially rebuffed
With the CCAP due to lapse at the end of June, the US – the World Bank’s largest shareholder – mounted a campaign for the lender to axe the programme entirely. Last April, US Treasury Secretary Scott Bessent publicly welcomed the plan’s upcoming expiration, urging the bank to “shift its myopic focus on climate” and abandon its “distortionary” 45% climate finance target.
But Washington was left increasingly isolated during protracted negotiations in recent months as both European governments and a wide-ranging coalition of developing countries held firm on the plan’s extension, sources with knowledge of the discussions told Climate Home News.
In May, executive directors representing a bloc of nearly 100 countries, including China, Brazil, Saudi Arabia and Russia, sent a letter to the World Bank’s board requesting the CCAP be extended and calling for an independent review of the programme.
While the US had previously seemed unwilling to compromise with its European counterparts, that intervention got it to “back off from its most extreme positions”, E3G’s Scull said.
Focus on “outcomes”
In its statement on Monday, the World Bank Group said it would place less weight on the amount of money flowing into projects with climate benefits and shift its focus to “outcomes”, including indicators such as greenhouse gas emissions avoided and the number of people better shielded from climate risks.
The UK’s international development minister, Jenny Chapman, said in a post on LinkedIn this week that the extension of the CCAP is “a critical step forward”, adding that the stronger emphasis on results “is essential to ensure maximum impact, and the UK will hold the Bank to account to ensure delivery”.
Despite ditching its headline goal, the international lender is still expected to keep counting the volumes of climate finance for the vast majority of its activities. That’s because the individual entities belonging to the group continue to have their own climate targets embedded in their current mandates.
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For example, the International Development Association (IDA), which supports the world’s poorest nations, has committed to providing 45% of its funding to climate-related activities until 2028. And its larger lending arm, the International Bank for Reconstruction and Development (IBRD), should keep aiming for 30% of its financing to have climate benefits.
Joe Thwaites, a climate finance expert at the Natural Resources Defense Council (NRDC), said these targets “can be a backstop against the bottom falling out”. “Client countries are emphasising that they want to see more investments in clean energy and resilience,” he added.
No major change expected
The World Bank’s provision of climate finance is also crucial for wealthy countries’ efforts to meet a commitment to provide $300 billion a year for developing countries by 2035 under the new UN climate goal agreed at COP29 in 2024.
That year, multilateral development banks (MDBs) accounted for around half of all climate finance provided by developed countries under the previous $100-billion-a-year goal, according to calculations by the Organisation for Economic Co-operation and Development.
UK development minister Chapman said this week that the bank “must continue to meet the expectations of the wider international community, including those set out at COP29”. There, MDBs said that by 2030, their annual joint climate financing for low- and middle-income countries would reach an estimated $120 billion.
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Rajneesh Bhuee, just transition lead at campaign group Recourse, said it was a “blow” that the World Bank’s headline target had been dropped, but she doesn’t expect to see climate financing reducing – at least in the short term.
“This is the [bank] management’s way of alleviating pressure from the US and ensuring they can have some sort of calm internally,” she told Climate Home News.
Thwaites said shareholder countries should hold the bank’s leadership accountable for delivering what countries have “agreed and need” on climate action.
“If World Bank climate finance does start to fall, donors should focus their support on other international financial institutions that continue to prioritise climate,” he added.
IMF also steps back from climate focus
Regional development banks outside of the Americas may be under less pressure to water down their climate mission. But the World Bank’s sister institution – the International Monetary Fund (IMF) – has seen its enthusiasm for climate action ebb, according to a report released in June by its official watchdog, the Independent Evaluation Office.
The report said that in 2021, the fund placed great emphasis on tackling climate change, as shown by its flagship climate strategy published that year and the establishment of the Resilience and Security Trust in 2022.
But in the last year or so, it found “decreasing emphasis on climate-related issues” which coincided with IMF cost-cutting, “emerging geopolitical challenges” and reduced support for climate action from some unnamed IMF member countries.
Last year, US finance minister Bessent accused the IMF of “mission creep”, accusing it of spending too much time on climate action, gender and social issues.
The evaluation report found that the focus on climate change among the IMF’s management and executive board has weakened, and its flagship reports have not included any climate-related chapters since 2023. IMF head Kristalina Georgieva and other managers mentioned climate-related terms in speeches and statements to the board far less in 2025 than the preceding years, it noted.
While most of the nearly 700 IMF’s staff surveyed welcomed the swing away from climate work, others bemoaned it and felt “self censored” when working to promote awareness of the risks of climate change to the global economy – which the IMF is tasked with protecting.
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World Bank’s climate work can endure without finance target, experts say
June Rubis is a steering group committee member for the Cali Fund, from Sarawak in Malaysian Borneo.
At COP16 in Cali, governments made a significant commitment: at least half of the funding from the new Cali Fund should support the self-identified needs of Indigenous Peoples and local communities, including women and youth. It was a watershed moment for multilateral benefit-sharing.
The challenge now is to translate that commitment into access arrangements that recognise the different institutions, priorities and decision-making processes of Indigenous Peoples and local communities.
For generations, biodiversity and traditional Indigenous knowledge have provided significant value to companies who depend on nature’s genetic diversity to discover new drugs that fight diseases, create products that improve health, and grow crops resilient to extreme heat and flooding events. While some compounds are sampled directly from the source country, increasingly the digital blueprints are held in online public databases which are freely accessible to use for innovation and research.
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The Cali Fund was established at COP16 to encourage commercial users of Digital Sequence Information, or DSI, to share benefits arising from its use. Estimates suggest it could generate over $3.5 billion a year – a stark contrast to the modest $10,656 currently committed to the fund from just five SMEs, underlining how much progress must be made at COP17 over the next two weeks.
The COP16 decision that set up the fund offers two routes for money to reach Indigenous Peoples and local communities: through government authorities, and through direct payments to institutions identified by Indigenous Peoples and local communities themselves.
Varied ways of organising
Indigenous Peoples and local communities organise through a wide range of institutions. Some have national or regional organisations experienced in managing international grants. Others work through territorial organisations, customary institutions, community associations, cooperatives or networks. Some have professional finance teams and audited accounts; others have extensive experience governing territories, collective resources or conservation work without having been organised around international funding requirements.
For direct access, some questions are already apparent. Which institutions should be able to receive funds? How should they be identified? What fiduciary standards should apply? How should safeguards and accountability work where institutional capacities differ? What support may be needed where institutions have strong community mandates but less experience with international finance?
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If access is designed mainly around institutions that already meet the expectations of large international finance mechanisms, early funding will tend to favour those already familiar to funders. They will gain further experience and become better positioned for future funding, while institutions with less administrative capacity may remain outside the system despite strong community mandates and long histories of stewardship.
These first decisions matter most, because they set the terms for everyone who follows.
The role of intermediaries requires care. Some Indigenous organisations may want a fiscal host to hold and manage funds on their behalf. Communities may choose to work through an NGO they trust. Government-facilitated arrangements may work well in particular national contexts.
What matters is the function an intermediary performs and the authority that comes with it. Providing administrative support is different from deciding which Indigenous organisations qualify, which priorities can receive support, or how success will be assessed. Direct access means communities keep that decision-making authority.
Decision-making power
The COP16 decision refers to institutions that Indigenous Peoples and local communities identify. But authority among Indigenous Peoples does not sit in one kind of body. It may sit with territorial organisations, customary institutions, community associations or combinations of these. Legal recognition and customary authority do not always align neatly.
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An important feature of the Cali Fund’s governance is that Indigenous Peoples and local communities participate as full members of the Steering Committee, rather than as observers. Seven Indigenous Peoples and local community representatives, one from each of the seven socio-cultural regions, participate in consensus-based decision-making alongside representatives of governments and UN entities. Six additional representatives from civil society, scientific institutions and the private sector participate as observers.
That representation carries responsibility. Institutional legitimacy, access and representation take different forms across the seven socio-cultural regions. Indigenous Peoples and local communities members therefore have an important role in bringing those differences into the Fund’s governance and in ensuring that arrangements developed for one context do not become the assumed model for everyone else.
Safeguards and clear responsibilities
COP17 can establish the core principles and direction, while allowing operational pathways to develop in ways that respond to different regional contexts. The decisions countries take in Yerevan will shape how that flexibility is realised in practice.
The choices made around access will influence which institutions are able to participate, which routes become established and which forms of authority are recognised within the funding architecture. The aim should be an architecture with enough structure to maintain confidence while allowing for different forms of Indigenous and community governance.
A credible direct-access pathway will need safeguards, financial oversight and clear responsibilities. This would give the 50% commitment a stronger institutional foundation.
The Cali Fund’s importance will ultimately depend not only on how much funding reaches Indigenous Peoples and local communities, but on whether they are able to determine how the money is accessed, governed and used. This requires access pathways that recognise their institutions, priorities and decision-making processes, rather than requiring them to conform to a single predetermined model.
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COP17 must settle who decides how Cali Fund money is disbursed
The UK government has approved extraction at the Jackdaw gas field in the North Sea, despite acknowledging that this decision could make it harder for Britain to convince other countries to move away from fossil fuel production.
UK energy secretary Miatta Fahnbulleh approved the drilling on Wednesday after months of high-profile debate, fuelled in part by interventions from US President Donald Trump. She argued that the project would boost energy security in the wake of the Middle East fossil fuel crisis, protect hundreds of jobs and add £2.9 billion ($3.88bn) to the UK economy.
She said Jackdaw’s gas would be cleaner than imported gas and would not prevent the UK from meeting its legally-binding carbon targets and its goal of net zero by 2050. As the field is already licensed, she said extraction was consistent with the Labour Party’s 2024 manifesto promise not to issue any new oil and gas licenses.
The same morning, the government announced a new Energy Wealth Fund to reinvest oil and gas revenues in the climate transition. It will start with £2 billion ($2.67bn) from the government and be topped up over time with tax revenues from offshore oil and gas production.
Climate campaigners in the UK and abroad were quick to condemn the decision, while a leading legal expert told Climate Home News it goes against the advice of the International Court of Justice. Meanwhile, the government’s own documents reveal that it recognises the drilling could damage the UK’s reputation and its ability to push forward the global transition away from fossil fuels.
“Climate leadership” blow
The 92-page decision document says Fahnbulleh “acknowledges that international standing on climate is important and accepts that a decision to grant consent may not further the UK’s international climate leadership.”
It adds: “She acknowledges concerns about the potential implications for the UK’s credibility and influence – including the difficulty inherent in encouraging other states to move away from fossil fuel production while the UK continues, in a limited and transitional way, to draw on its own domestic resources.”
While noting that Jackdaw has not been issued with a new license – just permission to extract gas – the document says Fahnbulleh “accepts this does not fully resolve the underlying tension in the UK’s position” but “considers this alongside the substance of the UK’s wider record [on emissions reduction], which remains significant”.
It continues that she accepts these concerns are “legitimate” and weigh against approving gas extraction, but only gives this argument a “moderate negative weight” set against the benefits of gas production.
“Huge” wrong signal
In international climate talks, the UK has long supported the transition away from fossil fuels and is one of very few major oil and gas producers to ban new licenses. Across the North Sea, the Norwegian government continues to make offshore areas available for oil and gas exploration through annual licensing rounds.
Climate experts and campaigners shared the concern, acknowledged in the decision document, that approving Jackdaw could set a precedent for fossil fuel production elsewhere. Sam Fankhauser, professor of climate change economics at Oxford University, said the direct climate impact of Jackdaw is “much smaller than the debate around it would suggest” but the “wrong signal it sends, however, is huge”.
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Bob Ward, policy and communications director at the Grantham Research Institute on Climate Change, said that while Jackdaw’s output will be very small, “it will signal to other fossil fuel producers that they too should carry on with business as usual, less than a month before the COP31”.
Kenyan campaigner Mohamed Adow, director of Power Shift Africa, called the decision “a serious blow to Britain’s international climate credibility” as “the UK cannot expect developing countries to move away from fossil fuels while giving the green light to new drilling in its own backyard”.
International Court of Justice
In July 2025, the International Court of Justice (ICJ) advised that government failure to take appropriate climate action “including through fossil fuel production” may amount to an internationally wrongful act.
The UK voted in favour of a United Nations resolution welcoming the advisory opinion. Yet, in its Jackdaw decision document, it notes that the ICJ opinion is not legally binding and says the UK does not accept the court’s opinion that the customary international law duty to prevent significant harm to the environment applies to climate change.
Fahnbulleh concludes that, although it will have “significant effect on the environment”, gas drilling in Jackdaw “would not lead to significant harm to the environment” – and so does not breach any duty to prevent such harm. Instead, the government document says the duty should be considered “as a matter of policy rather than legal obligation”.
Margaretha Wewerinke-Singh, who led Vanuatu’s legal team pushing for the ICJ’s advisory opinion, told Climate Home News that treating the duty as a matter of policy rather than legal obligation is “not how international law works”. “An advisory opinion is not a judgement,” she said, “but it states the law as it stands, and that law binds the UK whether or not it accepts it.”
“Even as a matter of policy,” she added, “the decision asks the wrong question: whether Jackdaw on its own would cause significant harm. The Court found that accumulated emissions are already causing significant harm. What matters is whether approving new production is consistent with the stringent due diligence the duty requires.”
Public support for decision
While the decision was criticised by climate campaigners and the opposition Green party, polling reported by Politico suggests that 55% of British adults support drilling at Jackdaw, with just 14% opposed. Even supporters of the UK’s net zero target back new drilling by more than two to one, the polling found.
Jackdaw is one of two North Sea oil and gas fields the government has been debating whether to extract more from for months. While Jackdaw is a small gas field, the other, Rosebank, is a much larger field that holds mostly oil.
Rosebank’s emissions are estimated to be around seven times higher than Jackdaw’s. Fahnbulleh told Sky News that Rosebank is “different” to Jackdaw because its oil would be exported, whereas Jackdaw’s gas will be used in the UK, adding that she will consider it “in its own right”.
The Guardian reported on Wednesday that UK officials say Fahnbulleh is minded to refuse approval for Rosebank. She has not yet taken a final decision on Rosebank, the newspaper said, but a ruling is expected later this year.
The post UK approves gas drilling despite admitting blow to “climate leadership” status appeared first on Climate Home News.
UK approves gas drilling despite admitting blow to “climate leadership” status