Criticism of World Bank climate finance misses the mark

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OVER THE past few months, funding for the climate change response has received a lot of attention, most of it unfavorable. The general global consensus is that there are not enough investments in climate change adaptation and mitigation, especially for the most climate-vulnerable countries, and that the investments that are made are misdirected. and labeled as “climate finance” when they really aren’t.

The World Bank, as the world’s largest and most capable development finance institution, has been the target of much criticism, some of which is justified; after all, it has spent the past few years being led by a nominee of the former occupant of the White House, a climate denier at heart who perfectly mirrored the lack of dynamism of the previous US administration. Even under the retirement of David Malpass, however, the World Bank was aware of the growing perception of a huge global financing gap and embarked on a series of reforms designed to address it and other inefficiencies. of the institution.

After the beginning of this process, which coincided with the arrival of the new president of the World Bank, Ajay Banga, a rather harsh report was published by the Center for Global Development (CGD) which presented the conclusions of a study on World Bank climate finance from 2000 to 2022. . The researchers wrote: “We find that funding is biased towards mitigation projects. These projects lack greenhouse gas (GHG) emission reduction estimates, and there is no standardized reporting of GHG estimates across the portfolio. poorer countries seem to have little to do with climate change mitigation or adaptation.”

In other words, World Bank-funded climate projects intended to reduce GHG emissions generally had no way of measuring whether they had actually done so; too many projects were geared towards mitigation, that is, reductions in emissions and other environmental impacts that apply to more middle- and upper-income countries than to the lowest-income countries. poor and most climate-vulnerable; and many projects were registered as climate-related without having a clear link to climate action.

These findings are alarming because they imply, first, that there are many unmet needs which, in the case of climate adaptation, could very well lead to loss of property, livelihoods and lives. . They also imply that a considerable amount of donor funds, the money that member countries of the World Bank can give to the institution to fund development and other projects, has been wasted.

And these kinds of findings worry the Philippines, because not only is it one of those climate-vulnerable countries that are supposed to be the recipients of the developed world’s financial obligations, but the World Bank is one of the “big three” in terms of development aid to that country, the others being the Asian Development Bank and the Japan International Cooperation Agency.

Whenever I see these kinds of reports, especially from credible sources like CGD, I tend to give them the benefit of the doubt, which isn’t really the best perspective to take I guess, but it’s is frankly what reality encourages. The global response to climate change is, in general, woefully inadequate, mired in bureaucracy and bureaucracy, and in far too many cases more performative than proactive. It is easy to find problems in the realm of climate policy and action, and so when an apparent problem arises, the assumption is that it is an issue that is most often appropriate.

In this case, however, it seems that the World Bank deserves some credit rather than polite censure, both on a general scale and with regard to this country specifically.

A close reading of the CGD study reveals that indeed the problems of identifying mislabeled projects, the bias in favor of climate mitigation projects and the lack of standards to quantify the impacts of climate of the climate were commonplace in the first half or two thirds of the 2000s. -2022 period covered by the research. Things started to change significantly during the 2015-2022 period, however; The World Bank’s overall financing for climate projects has soared, and despite some imbalance between mitigation and adaptation across its portfolio, where it concerned low-income countries whose GDP (product gross domestic) per capita was between $1,086 and $4,255, which includes the Philippines’ adaptation projects outweighed the mitigation projects both in number of individual projects and in dollar value.

While poor project categorization may have been a problem elsewhere, this does not appear to have been the case here in the Philippines. There are a total of five projects listed in the appendix of the report as part of the study dataset, and all of them are accurately described as partial mitigation or partial adaptation projects. These include the Northwind Bangui Bay project (2005); the Ethanol Plant Wastewater Biogas Project (2009); Project to recover methane from waste management (2010); technical assistance for the risk resilience and sustainability program (2017); and the Customs Modernization Program (2021), the latter having a small 3.0% counted as adaptation funding.

And, while I’m pretty sure the timing was entirely coincidental, the same day the CDG report landed in my inbox, the World Bank’s Philippine country office issued a press release announcing the approval of a $750 million loan to the Philippines. support “ongoing government reforms to attract private investment in renewable energy; improve plastic waste management through reduction, recovery and recycling; promote green transport, including the use of electric vehicles; and reduce climate-related fiscal risks in the agricultural sector”.

Rather than being criticized for its poor record on climate finance, it seems the World Bank should be credited with acknowledging at least some of its own shortcomings and implementing improvements. Like I said, there are a lot of bad guys and problems to identify; it is equally important, however, to recognize what seems to be on the right track, so that good ideas and practices can be copied and spread.

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