By Abdullahi Lukman
A global agreement to mobilise up to $1.3tn a year in climate finance for developing countries is facing growing uncertainty, as pressure from the United States prompts major multilateral development banks (MDBs) to reconsider their climate-financing targets.
The Inter-American Development Bank (IDB) and the Asian Development Bank (ADB) are reportedly reviewing their targets for directing funds towards climate-related projects, following the World Bank’s decision in June to retire its goal of allocating 45% of financing to projects with climate benefits.
The possible rollback comes amid growing political and budgetary pressure in major donor countries. Under President Donald Trump, the US has pushed MDBs to reduce green financing and ease restrictions on funding fossil-fuel projects.
The IDB, which provides major multilateral financing in Latin America and the Caribbean, has faced pressure to abandon its 45% climate-finance target. The bank provided $9.95bn in climate finance in 2025, a 46% increase from the previous year.
The Manila-based ADB is also considering changes to its target, although it said its existing climate-finance goals remain in place and are due for review in 2027.
In 2024, the bank committed $13.5bn from its own resources to climate finance, accounting for slightly more than half of its total annual commitments.
The potential changes could complicate efforts by developed countries to meet international climate-finance commitments. Nations have agreed to mobilise at least $300bn annually for developing countries by 2035, while working towards a broader $1.3tn target.
MDBs have become increasingly important to global climate finance, with their lending to low- and middle-income countries reaching $103bn last year, up about 20% from the previous year. Their public funding is often used to leverage larger amounts from capital markets and private investors.
Climate advocates have warned that abandoning financing targets could weaken efforts to help developing countries transition away from fossil fuels and adapt to rising climate risks, including floods, droughts, sea-level rise and extreme weather.
The pressure is also extending to individual donor
countries. Germany is expected to struggle to maintain its annual €6bn climate-finance commitment, while the UK has reduced planned international climate spending to £6bn over three years from an earlier £11.6bn target over five years.
Global climate finance reached about $2tn in 2024, the hottest year on record, but most of the funding went to developed economies and China, highlighting continued concerns over the availability of finance for vulnerable developing nations.
