The World Bank has made a significant shift in its climate finance strategy, retiring its 45% target for climate-related projects. This decision comes amid political pressure from the Trump administration, which has been advocating for a refocus on core development and financial stability. Despite this change, experts remain optimistic about the bank’s continued commitment to climate action.
The bank’s Climate Change Action Plan (CCAP), introduced in 2026, has been instrumental in transforming the World Bank’s approach to climate finance. Since its inception, the bank’s climate finance has nearly doubled, reaching $39.2 billion in 2026. This growth reflects a strong demand for projects with climate co-benefits which exceeded the target set at COP28.
From Targets to Outcomes
The World Bank’s decision to retire the 45% target is part of a broader shift from input-based lending goals to outcome-focused development. This approach aims to assess projects based on their economic and social results rather than the share of finance tagged as climate-related. World Bank President Ajay Banga has framed this model as smart development supporting jobs and growth while backing climate-relevant projects where they fit country needs.
This change gives the bank more flexibility but also reduces the clarity of a headline target that many investors and governments used to track climate finance ambition. The previous 45% goal replaced an earlier target of 35% of lending resources for climate-related projects. Both targets have now been dropped, but bank officials have said demand for projects with climate co-benefits remains strong among client countries.
Political Pressures and Shareholder Divisions
The decision to drop the climate finance target follows months of pressure from the Trump administration. U.S. officials have pushed the World Bank and International Monetary Fund to return to narrower mandates focused on development and financial stability. The United States, the bank’s largest shareholder, has been firm that the target must go despite other countries indicating their support for the bank’s climate goal.
The political divide among shareholders has been visible. In October, executive directors including France and 18 other shareholding countries signed a letter endorsing the bank’s continued work on climate change. The United States, Russia, Kuwait, and Saudi Arabia did not sign, reflecting a larger tension. Many countries still want multilateral lenders to support climate adaptation and clean energy, while others argue that climate targets can distract from poverty reduction, debt stress, and growth.
Continuing Climate Commitments
Despite the retirement of the 45% target, the World Bank’s work on climate will continue. The bank will honor a board request to undertake an independent evaluation of the climate plan to determine if it’s helping countries grapple with rising temperatures. The decision effectively extends the plan beyond its expiration at the end of June.
The bank will continue to track and report on the amount of money going to projects with climate co-benefits. It exceeded its own target last year by directing 48% of its financing to climate-related projects. Other climate targets embedded in agreements that govern different arms of the bank will remain, including one for the International Development Association, the bank’s fund for the poorest countries.
Multilateral development banks play a key role in global climate negotiations, where wealthy countries have committed to helping provide $300 billion a year for poorer countries by 2035. The World Bank’s decisions influence public lending, blended finance, and private capital flows into emerging markets. Any change to its climate framework can ripple through the development finance system.
