COP28: World Bank Ups Climate Funding to 45% in 2025

In a significant move, World Bank President Ajay Banga has declared an increase in the institution's commitment to climate-related financing. Starting from July 1, 2024, to June 30, 2025, the World Bank will allocate 45 percent of its annual budget to tackle climate issues, as stated in a recent press release.

This decision marks a substantial rise from the previous target of 35 percent by 2025. Since last July, the Bank's climate-related financing has been averaging 36.3 percent. Banga, speaking at the United Nations COP28 climate conference, underscored this step as part of a broader strategy to revamp the World Bank. This restructuring aims to enhance the institution's response to global challenges like the climate crisis.

The World Bank's climate financing will be evenly split between adaptation and mitigation efforts. This decision will be implemented by its two main arms: the International Bank for Reconstruction and Development and the International Development Association, the latter focusing on the world's most needy countries.

In a noteworthy development, the World Bank plans to expand its Climate Resilient Debt Clauses. This expansion will extend the coverage of these clauses to existing loans for nations most vulnerable to climate disasters such as floods and hurricanes. Furthermore, Banga announced that repayment pauses in the event of climate catastrophes would now include debt interest payments, not just principal repayments. This adjustment aims to provide affected countries with more resources to maintain essential services like access to water, food, and power.

The World Bank's revised mandate, as stated in October, encompasses a broad range of objectives. These include bolstering resilience and adaptation among communities most impacted by climate change, as well as focusing on ecosystem and biodiversity protection.

Under Banga's leadership, the World Bank, established in July 1944, is expanding its role in addressing global issues like hunger and the climate crisis. “Having pledged to squeeze more from its balance sheet to fund the fight against climate change, the Bank will continue to deliver on adaptation to help countries devastated by climate shocks and on mitigation to help reduce the greenhouse gases contributing to climate change,” the press release emphasized.

This enhanced commitment from the World Bank signifies a major stride in global efforts to address climate change, highlighting a more aggressive and financially backed approach to combating one of the most pressing issues of our time.