By David Lawder
WASHINGTON, June 29 (Reuters) – The World Bank Group said on Monday it will “retire” its previous goal to devote 45% of its annual lending resources to projects with climate co-benefits, but extend its longstanding Climate Change Action Plan that was due to expire on Tuesday.
The development lender, which had been under pressure from the Trump administration to abandon the climate lending target adopted during the Biden administration in 2023, said in a statement it would complete a shift to focusing on lending outcomes rather than input goals.
World Bank President Ajay Banga, who was initially charged with squeezing more climate lending resources from the bank’s balance sheet, has shifted his focus to “smart development,” which aims to boost job opportunities while still providing climate-related benefits such as drought-resistant agriculture or storm-resistant infrastructure and renewable energy where appropriate.
The World Bank said that at the request of its executive board, the lender’s Independent Evaluation Group would perform a review of the Climate Change Action Plan (CCAP), which was first adopted in rolling five-year plans in 2016.
The bank’s previous target of devoting 35% of lending resources to climate-related projects also was dropped, but bank officials have said that demand for projects with climate co-benefits remains strong from client countries.
Executive directors including France and 18 other shareholding countries had signed a letter last October endorsing the bank’s continued work on climate change, but the largest shareholder, the United States, declined to sign, along with executive directors representing Russia, Kuwait and Saudi Arabia, while India and Japan abstained.
U.S. Treasury Secretary Scott Bessent in 2025 had ordered the World Bank and the International Monetary Fund to return to their core missions of development and financial stability, arguing they had strayed too far into climate, gender and other areas opposed by the Trump administration. In April, he said the bank’s “myopic” focus on climate financing targets had to go.
French development minister Eleonore Caroit last week issued an eleventh-hour plea for the World Bank to keep the climate finance target intact.
“Our framework has served its purpose well, embedding smart development in all we do in response to client needs and priorities. We will therefore extend the CCAP,” the World Bank said.
The bank said its management would continue to track its climate scorecard indicators on net global greenhouse gas emissions and on beneficiaries with enhanced resilience to climate risks under the CCAP. It will make such reports for all projects, as well as quarterly and annually for its lending portfolio.
“We will explore and discuss ways to better structure our engagement on adaptation, nature and pollution,” the bank said.
(Reporting by David Lawder; Editing by Sonali Paul)
Comments