The World Bank, a cornerstone in global development financing, has made a significant policy shift by abandoning its target for climate finance. This decision comes after sustained pressure from the United States the bank’s largest shareholder. Despite this change, the bank’s Climate Change Action Plan (CCAP) remains in place, ensuring continued support for climate-related projects.
The World Bank, headquartered in Washington DC is the largest provider of climate finance worldwide, disbursing $39.2 billion in 2026 alone. This financing primarily takes the form of loans to developing countries, with a portion of grants and lower-interest loans distributed through the International Development Association (IDA).
The World Bank’s Role in Climate Action
The World Bank plays a pivotal role in mobilizing private investments in developing countries, focusing on projects that cut emissions and adapt economies to climate change. Between 2026 and 2026, the bank provided $164 billion in financing with climate co-benefits. A significant portion of this funding went towards clean energy and electricity access projects, with smaller shares allocated to public transport, water supply, and sustainable farming.
Emerging economies such as TurkeyIndia and Nigeria have been the largest recipients of the bank’s climate funds since 2026. Notable projects include extensive programs in India supporting renewables and green hydrogen, a Pakistan hydropower project, and initiatives to boost green development in Colombia.
The Decision to Abandon Climate Finance Targets
When Ajay Banga took over as World Bank president in 2026, there were widespread calls for reform. Banga announced a new target for 45% of the bank’s funding to be climate finance by 2026, replacing an existing target of 35%. This shift led to a significant increase in climate-related projects, with climate finance making up 48% of total funding in 2026.
The change in administration in the US, with Donald Trump replacing Joe Biden in 2026, brought a shift in international cooperation policies. The US, exerting considerable power as the largest shareholder, pressured the World Bank to weaken or abandon the CCAP. US Treasury Secretary Scott Bessent called for the retirement of the 45% climate-finance target, advocating for a focus on high-quality, durable projects.
The decision to continue with the CCAP was negotiated behind closed doors by the board of directors, representing national shareholders. While 19 of the 25 directors affirmed the need for both a plan and a target, the US, Russia, Kuwait, and Saudi Arabia declined to sign up. Japan and India also did not endorse the joint statement.
Implications for Global Climate Action
The World Bank’s decision to drop its climate finance targets has raised concerns among climate advocates. Critics have pointed to the dominance of loans that push developing countries further into debt and the lack of transparency in classifying projects as climate-related. The bank has also been accused of over-reporting climate finance.
Despite these challenges, the World Bank remains committed to supporting the demands of its clients, many of which have explicitly stated their need for climate-related investment. The bank’s continued focus on climate action, driven by client ambition, ensures that climate finance remains a priority, even without specific targets.
The European Investment Bank (EIB) has reaffirmed its commitment to climate finance leadership, surpassing its green goals in 2026 with climate investments reaching 60% of its total financing. This contrast highlights the differing approaches among multilateral development banks in response to US pressure.
