For years, heads of state and government, academics and development experts have been calling on the World Bank to lead the fight against climate change.
For too long, they say, the international lender has ignored the growing threats posed by rising temperatures and sea levels, been too conservative with its loans to developing countries struggling with climate disasters, and spent too much money supporting fossil fuels, the burning of which is dangerously warming the planet.
Mia Mottley, the prime minister of Barbados, led the initiative, implementing a reform agenda known as the Bridgetown Initiative and mobilizing others, including Emmanuel Macron, the president of France, to join it.
At the United Nations climate talks in Dubai, which began on November 30 and run until December 12, it is clear that much is changing at the World Bank.
Ajay Banga, 64, former CEO of Mastercard, took over as president in June. He replaced David Malpass, who was nominated by President Trump and resigned shortly after coming under fire for questioning the science of climate change in a live interview with The New York Times.
And while the World Bank has not instituted the kind of radical reform envisioned by its harshest critics, Banga, an Indian-born American, has over the past six months made a series of changes that he says are aimed at addressing the climate problem. crisis.
As the planet warms and storms, droughts, wildfires and floods become more extreme, poor countries find themselves in a particularly difficult situation. They are desperate for funds to recover from climate disasters and, at the same time, lack the money to prepare for the next calamity. They are saddled with debt, but need to invest in a transition away from fossil fuels so they can reduce the emissions that are warming the planet and causing so much damage in the first place.
The International Monetary Fund has also been accused of not doing enough to help countries adapt to climate change and of saddling poor nations with debt, and has made some modest changes. But under Banga’s government, the World Bank has leaned into its climate work.
Just weeks after taking over, the bank said it pause debt and interest payments for countries affected by natural disasters, including hurricanes and wildfires exacerbated by global warming.
Some 45 percent of the bank’s loans now go to climate-related projects, including the construction of new renewable energy, up from 36 percent the previous year.
The World Bank is testing new efforts to reduce methane emissions and help poor countries create responsible policies carbon credit markets.
The bank agreed to serve as the home of a new loss and damage fund that will distribute money to poor countries that have suffered irreplaceable losses due to climate disasters.
And Banga has been working to streamline a siled, bureaucratic organization, pushing it to move faster and emphasizing collaboration.
“This is all sensible,” Banga said in an interview. “The fact is that we should have a redefined vision of the past, and that includes addressing global crises and having a habitable planet.”
So far, outside observers have largely supported Mr. Banga.
“Ajay is trying to put climate and vulnerability reduction around the world at the forefront,” said Hilen Meirovich, director of climate change at IDB Invest, a development bank. “There is a lot of compromise, collaboration and testing that is taking place..“
Hans Peter Lankes, managing director of the Overseas Development Institute, worked at the World Bank until a few years ago and said the institution has been transformed under Banga’s government.
“If you talk to anyone at the World Bank, the atmosphere has changed enormously,” he said. “The whole sense of purpose has changed.”
Banga appears to have forged a bond with Mottley of Barbados. The two met for the first time earlier this year, in a London airport lounge. They bonded over a shared love of cricket, a popular sport in both their home countries, and Ms Mottley outlined her vision for how the bank should change. Since then, they have become friends and have appeared together several times, including at a New York Times event in September.
“We haven’t been very concerned about whether it’s called Bridgetown or not,” said Avinash Persaud, Barbados’ climate envoy. “It is a collection of ideas. It is a vision of finance. And I would say that the victory of 2023 has been that this new climate financial system has emerged.”
However, there is only so much Banga can do on his own. After all, the World Bank is governed by its shareholders: the United States, China, Germany, France, Japan and other major economies.
If those countries do not agree to provide more capital and accept more risk, the bank will be limited in the amount of money it can make available to developing countries trying to adapt to climate change.
Fossil fuel lending by the bank has declined but persists as many developing countries continue to pursue economic growth through new oil and gas projects.
“The low-hanging fruit is being picked,” said Manish Bapna, executive director of the Natural Resources Defense Council. “Now it’s the biggest fruit we have to play for.”
The bank’s major shareholders have given no signs that they are willing to dramatically increase their overall contributions. But Banga has said that until now, big shareholders had supported the new emphasis on climate.
“Right now, I can’t complain to the board about this kind of thing.,” Mr. Banga said.
The World Bank still faces many challenges in the coming months. High interest rates continue to make borrowing more expensive, especially in the developing world. Tensions persist over the role of China, which is a major shareholder and also a major borrower in the bank. And with a workforce of more than 10,000 people spread across 170 countries, reforming an entrenched bureaucracy remains a challenge.
“The institution’s business model must be changed to be able to face a challenge of this magnitude,” said Lankes. “That’s going to be a difficult task.”