The World Bank Promises to Revamp Its Climate Finance Tracking

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The World Bank Promises to Revamp Its Climate Finance Tracking

On June 14, we published a paper titled “What Counts as Climate?” in which we argued that hundreds of the projects the World Bank counts as climate efforts—many in poorer countries—appear to have little to do with climate change mitigation or adaptation[KS1] . Further, the World Bank’s climate portfolio lacks estimates of greenhouse gas (GHG) emissions reductions and has no standardized reporting on GHG estimates.

In the paper, which was widely covered in the media, we examined hundreds of projects listed by the World Bank as having a small climate co-benefit to demonstrate our case. We also looked at several examples of large projects tagged as 100 percent climate-related that had little to no discussion of the impact of those projects on GHG emissions. We were also unable to verify the Bank’s topline numbers on emissions reductions.

A week after our report was published, the World Bank sent out a public email indicating:

…we are enhancing the way we track climate outcomes that goes beyond measuring the volume of our climate co-benefits to primarily measuring the impact of our financing. This approach will build on our work to develop mitigation, adaptation, and resilience outcome metrics and will measure how we help countries move to a low-carbon future. We will work with top experts to design these metrics and partner with other Multilateral Development Banks. The goal is to launch a new climate outcome platform later this year at COP 28.

Measuring outcomes is critical to assessing the bank’s portfolio of climate projects. To make sure that the bank’s strategy is translated into well targeted operations with clear outcomes and outputs, we recommend:

  • A meaningful accounting of climate spending that is transparent and easy to understand. Project level estimates of GHG emissions reductions must be documented so that topline numbers reported in the Bank’s annual scorecard can be verified.
  • A clear definition of adaptation. The World Bank may choose to define climate adaptation projects narrowly to include only those that directly address the consequences of some observed or anticipated change in climate. Or the bank could argue that general economic development has major climate resilience co-benefits. It is empirically true that general economic development is strongly associated with decreased vulnerability to climate.
  • For every project the World Bank tags as climate-related, a rationale as to why the project reduces emissions or helps countries adapt to climate change. This rationale should be clearly stated in the project summary.
  • A justification for claiming responsibility for projects tagged with low climate shares. The bank might even consider discarding this type of tagging as it is analytically weak and makes climate co-benefits hard to assess.

We commend the World Bank for improving its tracking of climate finance and look forward to the launch of the World Bank’s new climate outcome platform at COP28.

This blog post was also published by the Center for Global Development.