The new leader of the World Bank has put the climate crisis at the top of his agenda
Heads of state and government, academics and development experts have been calling on the World Bank for years to take the lead in the fight against climate change.
They say the international lender has for too long ignored the growing threats of rising temperatures and sea levels, been too conservative in its lending to developing countries facing climate disasters, and spent too much money supporting fossil fuels, whose combustion heats the planet dangerously.
Mia Mottley, the prime minister of Barbados, led the charge, launching a reform agenda known as the Bridgetown Initiative and calling on others, including Emmanuel Macron, the president of France, to join her.
At the United Nations climate talks in Dubai, which started on November 30 and ran until December 12, it is clear that a lot is changing at the World Bank.
Ajay Banga, 64, the former CEO of Mastercard, took over as president in June. He replaced David Malpass, who was nominated by President Trump and resigned early after coming under fire for disputing the science of climate change in a live interview with The New York Times.
And while the World Bank has not implemented the kind of sweeping reform its most ardent critics envisioned, Mr. Banga, an Indian-born American, has implemented a series of changes over the past six months that he says are aimed at tackling climate . crisis.
As the planet warms and storms, and droughts, forest fires and floods become more extreme, poor countries are in a particularly difficult situation. They are desperate for money to recover from climate disasters, while also hungry for money to prepare for the next disaster. They are saddled with debt, yet 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 burdening poor countries with debt, and has made some modest changes. But under Mr Banga, the World Bank has focused on its climate work.
Just weeks after he took over, the bank said this would happen stopping debts and interest payments for countries affected by natural disasters, including hurricanes and forest fires exacerbated by global warming.
As much as 45 percent of the bank’s lending now goes to climate-related projects, including the construction of new renewable energy, compared to 36 percent the year before.
The World Bank is working on a new pilot project efforts to reduce methane emissions and help poor countries become accountable carbon credit marketplaces.
The bank agreed to serve as the home of a new, so-called loss and damages fund that will distribute money to poor countries that have suffered irreplaceable losses from climate disasters.
And Mr. Banga has worked to streamline a bureaucratic and siled organization, moving it faster and emphasizing collaboration.
“These are all sensible things,” Mr. Banga said in an interview. “The fact is that we must have a vision that is redefined from the past, and that includes addressing global crises and having a livable planet.”
Outside observers have largely supported Mr Banga so far.
“Ajay is trying to put climate and vulnerability reduction around the world front and center,” said Hilen Meirovich, head of climate change at IDB Invest, a development bank. “There’s a lot of commitment and collaboration and testing going on.”
Hans Peter Lankes, director of the Overseas Development Institute, worked at the World Bank until a few years ago and said the institution has undergone a transformation under Mr Banga.
“If you talk to anyone inside the World Bank, the atmosphere has changed enormously,” he said. “The whole sense of purpose has changed.”
Mr Banga appears to have developed a bond with Ms Mottley from Barbados. The two met for the first time in an airport lounge in London earlier this year. They developed a shared love of cricket, a sport popular in both their native countries, and Ms Mottley outlined her vision for how the bank should change. Since then, they have become friendly and have appeared together several times, too at a New York Times event in September.
“We don’t really care whether it’s called Bridgetown or not,” said Barbados climate envoy Avinash Persaud. “It’s a collection of ideas. It is a vision on finance. And I would say the victory of 2023 has been to create this new climate financial system.”
Yet there is only so much Mr. Banga can do alone. Ultimately, the World Bank is governed by its shareholders: the United States, China, Germany, France, Japan and other major economies.
Without these countries agreeing to inject 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.
Bank fossil fuel lending has declined but persists as many developing countries continue to pursue economic growth through new oil and gas projects.
“The easy, low-hanging fruit is being picked,” said Manish Bapna, CEO of the Natural Resources Defense Council. “Now it’s the bigger fruit we have to play for.”
The bank’s major shareholders have not indicated that they are willing to drastically increase their total contributions. But Mr Banga has said major shareholders have so far supported the new emphasis on climate.
“At this point I can’t complain about the board when it comes to these kinds of things,said Mr. Banga.
The World Bank still faces many challenges in the coming months. High interest rates continue to make lending expensive, especially in developing countries. Tensions remain over the role of China, which is both a major shareholder and a major borrower of the bank. And with a workforce of more than 10,000 employees spread across 170 countries, reforming an entrenched bureaucracy remains a challenge.
“You have to change the business model of the institution to meet a challenge of this magnitude,” said Mr Lankes. “That will be quite a task.”