World Bank’s Climate Change Action Plan extended despite US pressure
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Article summary
- World Bank’s 45 per cent climate finance target ‘retired’ after US criticism.
- CCAP will be evaluated by Bank’s Independent Evaluation Group after extension.
- World Bank management criticised by civil society for lack of clear signal on future of institution’s climate work.
The World Bank Group’s (WBG) Climate Change Action Plan (CCAP) was extended indefinitely on 29 June, after negotiations were successful in resolving an impasse on the immediate future of the Bank’s climate work. A World Bank statement announcing the extension of the CCAP said the institution’s 45 per cent climate finance target would be retired, although the Bank will continue to report to the executive board on climate finance totals. The short statement indicated that the Bank’s Independent Evaluation Group (IEG) would review the CCAP, but did not provide a time-frame or clarify how the review would inform the future of the Bank’s climate commitments.
WBG management and executive directors remained locked in discussions about extending the CCAP for months, with the United States – the Bank’s largest shareholder – actively seeking to weaken the Bank’s climate commitments despite a deepening global climate crisis.
The World Bank’s 2021-2025 CCAP (see Observer Summer 2021) was extended for 12 months in 2025 and was due to expire on 30 June. The 2021-2025 CCAP, the Bank’s second five-year plan following the 2016-2020 version, committed the institution (inter alia) to aligning all its activities with the Paris Climate Agreement – to which the Bank is an observer – a process it ultimately launched on 1 July 2023. It also included the creation of a new diagnostic, Country Climate and Development Reports, through which the Bank helps countries assess how to integrate climate and development planning, and an initial target of 35 per cent of its portfolio consisting of climate finance, which was later increased to 45 per cent.
Negotiations among WBG shareholders on a possible extension of the 2021-2025 CCAP have been extensive, amid the US’s wider war on climate action and slashing of development finance. In his statement to the World Bank’s Development Committee in April, US Treasury Secretary Scott Bessent called the CCAP’s 30 June expiration “long overdue” and criticised the WBG target of 45 per cent of its lending and other investments being climate finance as “distortionary”. In an event on the sidelines of the Spring Meetings, Bessent questioned the legitimacy of the scientific consensus on climate change, referring to it as “elite beliefs”, per the New York Times, despite overwhelming evidence of the human drivers of climate change.
However, according to reporting by Devex, the G11+ group – consisting of the executive directors representing the Bank’s borrower countries – issued a joint letter in May calling for a one-year extension of the 2021-2025 CCAP accompanied by a review by IEG to inform a decision on the best way forward. With fossil-fuel producing countries such as Russia and Saudi Arabia signing the statement, the US’s position appeared increasingly isolated. Previously, ahead of the 2025 Annual Meetings, Reuters reported that 19 World Bank executive directors had issued a joint statement indicating that they expected the World Bank to develop a new version of the CCAP.
A 27 May letter signed by 93 civil society organisations (CSOs), including Power Shift Africa and Climate Action Network International, criticised WBG management’s unclear signals about the future of the Bank’s climate work, and called for, “No lapse or retrogression” of its climate commitments, and a “further one-year extension of the 2021-2025 CCAP, allowing time for the development of a new five-year CCAP, via consultation with Bank member states and global civil society.”
World Bank climate finance emerges as key battleground
The Bank’s 45 per cent climate finance target, which drew the ire of Bessent, was announced by World Bank President Ajay Banga at COP28 in late 2023. This effectively superseded the 35 per cent target included in the Bank’s 2021-2025 CCAP, which – per the Bank’s controversial climate finance reporting (see Observer Autumn 2022) – it had already surpassed at the time. According to the Bank, in fiscal year 2025, the WBG delivered $50.8 billion in climate finance – a record high – with it counting 48 per cent of all investments as having ‘climate co-benefits’, the Bank’s benchmark for being counted as climate finance.
However, CSOs have criticised the lack of transparency of World Bank climate finance – which is particularly glaring for the International Finance Corporation (IFC), the Bank’s private investment arm, and the Multilateral Investment Guarantee Agency (MIGA), the Bank’s commercial insurance arm, which only publish aggregate totals of their annual climate finance, rather than project-level information (see Briefing, Grading the World Bank Group on climate justice principles).
The Bank’s climate finance is also largely provided as loans, with the exception of some grant financing provided via the International Development Association (IDA), the Bank’s low-income country lending arm. This raises the issue of the alignment of this finance with the ‘polluter pays’ principle enshrined in the UN Framework Convention on Climate Change. Despite these shortcomings, the finance provided by the Bank and its multilateral development bank (MDB) peers is currently a key pillar of efforts to mobilise $300 billion in climate finance for low- and middle-income countries by 2035, as part of a new global climate finance commitment agreed at COP29 in late 2024 (see Observer Winter 2024). A change in the predictability of MDB climate finance would raise further questions about the adequacy of climate finance flows being provided by rich countries under the Paris Agreement.
World Bank risked breaking promise to renew CCAP agreed in IDA21 replenishment
A significant backdrop to the negotiations was the fact that the World Bank committed to developing a new CCAP in the report for the 21st replenishment of IDA (IDA21), approved by World Bank governors in April 2025. The report provides the legal basis for the IDA21 replenishment, and holds significant importance within World Bank governance. The IDA21 replenishment report explicitly noted, “The WBG commits to developing a successor to the Climate Change Action Plan (CCAP) 2021-2025. It will evolve in view of the WBG Scorecard, corporate targets, and other strategic initiatives.”
A 30 June reaction to the CCAP extension by global CSO coalition the Big Shift pointed out that key questions on the CCAP’s future development remain unanswered, following the initial statement released from the Bank.
In response to the CCAP extension, Haneen Shaheen from regional CSO MENAFem Movement noted, “Climate action is not an optional add-on to development – it is the foundation of it. Any attempt to dilute the World Bank’s climate commitments while communities face escalating debt, displacement, and climate disasters is a step backwards. The Global South needs transformative, accountable public finance, not diluted frameworks and disappearing targets.”
