World Bank chief Ajay Banga's one-year climate report card

When Ajay Banga took over as head of the World Bank last June, he vowed to prioritize tackling climate change at the institution. But 12 months on, how much has he actually delivered? The president has certainly made a lot of noise about climate. One of his first moves was to introduce a new climate-oriented vision statement for the bank to “create a world free of poverty on a livable planet.” Then, during the 28th United Nations Climate Change Conference, or COP 28, in December, Banga committed the lender to spend 45% of its annual financing on climate-related projects in the next fiscal year, up from its previous 35% target. During the Spring Meetings in April, Banga announced a plan to provide affordable electricity to 250 million people across Africa by 2030, with all new power generation coming from renewable energy sources. He also pushed carbon markets in 15 countries and openly criticized global subsidies for fossil fuels, agriculture, and fisheries amounting to $1.25 trillion. One year on though, some civil society groups are not happy; they want the bank to stop investing in climate-harming fossil fuels, natural gas, and methane-emitting industrial livestock. “There’s been a lot of talk about financing climate adaptation and mitigation in borrowing but little action addressing bank’s own investments. These investments, both directly and indirectly, drive emissions and exacerbate the climate crisis; the very thing he wants to address. “Banga should walk the talk by cleaning up the World Bank’s own act and encouraging other financing actors, over which it has influence, to follow suit,” Erich Pica, president of Friends of the Earth, said during a recent online press conference. They point to the bank’s continued investment in coal and natural gas, as well as industrial livestock production, which accounts for about one-third of human-caused emissions through methane gas. The bank, however, argues that while it is committed to ultimately ending the use of fossil fuels and natural gas, some countries need to keep using them while they make the “clean energy transition.” Furthermore, many borrower countries, such as Senegal, actually want fossil fuel investment. “By far the World Bank’s most important role when it comes to climate change is to help the World’s poorest countries adapt to a problem overwhelmingly created by richer countries,” Charles Kenny of the Center for Global Development told Devex in an email. “That means supporting broad based development that’s robust to a warmer planet. And in some cases, it will mean support for electricity generation using natural gas or transport using fossil fuels. But I hope it can also play a growing role in providing finance for zero carbon technologies.” But Kenny pointed out that Banga needs the resources to implement a climate-focused agenda, which ultimately comes down to the shareholders. "Ajay Banga would be able to lead on both if the shareholding countries demanding the Bank does more on climate agreed to a general capital increase for IBRD and committed increased finance to IDA. Sadly they’re all talk and no checkbook," he added. On the whole though, the bank’s fossil fuel investment is low. In fiscal 2023, which ended June 2023, it allocated $170 million to natural gas out of the $122 billion committed overall, and it has not directly funded coal plants since 2010, Banga said during an interview last September. However, civil society groups have questioned the bank’s numbers. According to data from the Big Shift Global, a coali­tion of over 50 civil soci­ety organizations and think tanks from the global north and south, in fiscal 2022, the bank dir­ectly fin­anced $885 million in fossil fuels, alongside sig­ni­fic­ant amounts of indir­ect fin­ance. A recent report by Oxfam International also raises questions about how the bank reports its climate finance flows, suggesting the numbers have been exaggerated by as much as 40%. “Since raising these issues, the bank has done nothing to improve its climate reporting,” Kate Donald, head of Oxfam International’s Washington, D.C. office, said during the press conference. The World Bank has defended its methodology for measuring climate finance while also saying it plans to develop new metrics to better capture the actual outcomes and full value proposition of its climate work. The lender is also working to mainstream methane reduction efforts across its work, and during COP 28 announced it would launch 15 national programs to slash methane emissions in livestock operations, rice production, and waste management, and support early interventions in countries where emissions are set to rise exponentially. Donald also questioned the bank’s plans to crowd-in the private sector to help address the climate, and other crises — something that Banga, the former head of Mastercard, has pushed for. “The increasing reliance on the private sector-first approach raises serious concerns. The poorest people are being left behind or pushed into bankruptcy as development funds are channeled into private sector initiatives that often do not prioritize their needs or rights,” Donald said. While Donald acknowledged that some countries in the global south demand loans and investment for fossil fuels, this is because countries are “desperate for resources and investment in any form,” thanks to a global system that is rigged against them, causing low-income countries to repay more in debt to countries in the global north than they receive in grants and loans, she said. “One of the reasons many countries in the global south are demanding money for fossil fuels is not because they want money for fossil fuels per se, but because they’re desperate for resources because many of them have been systematically drained of resources,” Donald said. Ultimately, public funding should be put to better use than subsidizing fossil fuels, according to Donald. “Public funds should only be used in ways that are going to benefit the poorest and we all know that climate change is already having the biggest impacts on the poorest communities,” she said. Update, June 6, 2024: This article was updated with additional comments from Charles Kenny and corrected to reflect that the bank allocated $170 million to natural gas in fiscal 2023.