The World Bank has abandoned a target for 45% of the funding it gives developing countries to go toward climate projects, according to a Carbon Brief report. The decision comes amid ongoing debates about how multilateral development banks should balance emissions reduction with development priorities.
The abandoned goal had aimed to channel nearly half of World Bank lending toward climate mitigation and adaptation efforts in low-income nations. Without this benchmark, advocates warn that climate finance could slip down the bank's agenda, potentially undermining the Paris Agreement's goal of mobilizing $100 billion annually for developing countries by 2025.
Economically, the shift may redirect billions of dollars away from renewable energy, grid resilience, and green infrastructure projects that developing nations urgently need. The World Bank has not specified a new climate finance target, creating uncertainty for countries planning their energy transitions and for investors in green bonds and climate-linked instruments.
Geopolitically, the move could strain relations between developed nations—who pushed for the climate target—and developing countries that rely on World Bank financing for both emissions reductions and poverty alleviation. It also comes as other development banks, including the Asian Development Bank, face pressure to increase climate lending.
Critics argue the 45% target may have been unrealistic given competing demands for health, education, and infrastructure investments. Some developing nations fear that climate conditions attached to loans could limit their economic growth.