By Faridat Salifu
The World Bank Group has shifted its approach to climate finance by scrapping its target to channel 45% of annual lending toward projects with climate co-benefits, signalling a move away from fixed climate finance benchmarks in favour of country-driven priorities.
The institution announced that it would also discontinue the 35% climate finance target outlined in its Climate Change Action Plan (CCAP), saying future investments would be determined by client countries’ ambitions rather than institutional lending quotas.
“We will retire the 45% climate co-benefits target and the 35% target in the Climate Change Action Plan (CCAP). We have done significant work in answering client demand and needs.
Further progress on outcomes will continue to be driven by client ambition and enabled by the work of the Knowledge Bank, consistent with countries’ international commitments,” the World Bank said in a statement issued on June 29.
The 45% target was introduced in 2023 as part of the Bank’s efforts to increase financing for projects that support both development and climate objectives.
The latest decision means the Bank will no longer be assessed against a specific percentage of climate-related lending, although it maintains that climate action will remain embedded in its operations through support tailored to borrowing countries’ priorities.
The announcement comes as the institution faces increasing political scrutiny over its climate agenda. Reports indicate that the administration of former U.S. President Donald Trump had urged the Bank to eliminate its climate lending target.
The United States is the World Bank’s largest shareholder, controlling roughly 16% of the voting power in the International Bank for Reconstruction and Development (IBRD), the Bank’s main lending arm. It is also the only shareholder with veto authority over certain structural changes within the institution.
The World Bank had previously ended financing for upstream oil and gas projects from 2019 while allowing limited support for natural gas investments in countries with urgent energy needs where renewable alternatives were not immediately available, provided such investments did not create long-term carbon dependence.
The policy shift is likely to draw mixed reactions from climate advocates and developing countries, many of which continue to rely on multilateral development banks for financing to implement climate adaptation and mitigation projects.
