World Bank, IMF Shift Focus from Poverty to Climate Change

Shifting development funding to emissions reduction takes money from the poor and makes them less resilient.

World Bank, IMF Shift Focus from Poverty to Climate Change
International Monetary Fund Managing Director Kristalina Georgieva meets with Alok Sharma, President for COP26, at the International Monetary Fund in Washington, DC, on September 24, 2021. IMF Photo

With more than 3 billion people still living on less than $5.50 a day, poverty reduction is central to human flourishing. It’s also key to preventing the worst effects of climate change—people are much less vulnerable to climate shocks if they aren’t poor.

That should be the main task of the two key multilateral institutions tasked with reducing poverty and promoting development: the World Bank, which provides loans and grants for development projects, and the International Monetary Fund (IMF), which helps poor countries overcome currency crises and keep their finances stable.

Now, however, both institutions are under pressure from their rich donor governments to sideline economic development and poverty reduction—and shift focus to reducing carbon emissions. The IMF recently proposed the creation of a $50 billion Resilience and Sustainability Trust to help countries tackle climate change, where support could be contingent on recipient countries’ plans to reduce emissions. Similarly, the World Bank has unveiled a climate action plan promising to align all future projects with the Paris Agreement to slash emissions. Already, the World Bank has severely restricted investments in natural gas projects, no longer funding exploration, development, production, or transportation of gas in the developing world.

In their zeal to reach emissions targets, rich countries are conflating two things, both of which are crucial to avoid the worst effects of climate change. Mitigation—the reduction of emissions—mostly needs to take place in rich and middle-income countries, which are responsible for the vast majority of carbon emissions. Adaptation—improving resilience to a warming climate—is lifesaving in poorer, more vulnerable countries. Adaptation requires investments in better housing, transportation, education, infrastructure, water management, agricultural technology, and other sectors. And it requires reducing poverty—so that more people have the resources to cope with weather-related extremes.

Until now, these kinds of investments have been the bread and butter of the World Bank and other development institutions. By shifting development funding to emissions reduction, they are taking money from the poor and making them less resilient than they would otherwise be. This shift of focus from poverty to climate is unjust, ineffective, and disastrous for the world’s poor.

Read the full piece on Foreign Policy.