Bezos Earth Fund chief Andrew Steer said he supports Biden administration officials who are calling for an overhaul of multilateral development banks’ lending approach so that more climate finance goes to lower-income countries .
Steer, a former World Bank staffer, told Devex he agreed with U.S. climate envoy John Kerry, who earlier this week called for banks to “put to use rules which actually allow a major significant drawing on capital above what we have.”
For months, Kerry has advocated for MDBs to deliver more climate finance. Meanwhile, Treasury Secretary Janet Yellen has demanded the World Bank produce “a road map for reform” by the end of the year so that it may unlock billions of dollars for countries in need, including on climate finance. The U.S. holds power to drive these changes at the World Bank in particular, given its status as the largest shareholder.
A senior Treasury official told Devex last week the department would keep the pressure on anti-poverty lenders around the world to reform and get more lending out the door.
“Yes, that should happen,” Steer said of the proposed overhaul. “The problem is, number one, the multilateral development banks want to stay too safe.” Steer, who joined the Bezos Earth Fund in 2021, was speaking at a Devex event on Thursday on the sidelines of the 27th United Nations Climate Conference in Sharm el-Sheikh, Egypt.
The banks are risk-avoidant — often arguing it is to preserve their coveted AAA credit ratings — and that won’t change until there is a change in the thinking among the banks’ major-shareholding countries like the United States, he added.
“I think the staff of the World Bank actually follow the leadership and the leadership comes from the [shareholders] of the World Bank,” according to Steer, who was previously a special envoy for climate change at the bank.
World Bank President David Malpass has been under fire for his remarks on climate change, and critics have long accused him of slow walking reforms. But last week he told Devex he “embraced” the calls for an overhaul.
Philanthropists should similarly be looking to “leverage” the dollars they spend to “pull down interest rates,” according to Steer, who manages the Earth Fund’s $10 billion commitment from Amazon founder Jeff Bezos. The fund has spent about $1.6 billion in its first two years and hopes to eventually reach $1 billion in annual spending, Steer said.
“It’s easy to spend money. It’s difficult to spend money well. And most philanthropy to date has been very honorable and effective, but it’s been unleveraged,” he said.
In most cases, philanthropic dollars aren’t used to leverage other dollars that come in, he said.
Shabtai Gold contributed reporting.