The World Bank’s International Finance Corporation has financed and mobilised $7.7 billion in capital for climate-related schemes in the year to June as it continues to help public and private sector projects gain access to funding despite rising interest rates and amid a weakening economic outlook.
The multilateral lender invested $4.4bn into development schemes and financing deals from its own account and mobilised $3.3bn from the private sector in the previous financial year that ended on June 30, the IFC’s global head and director of climate business, Vivek Pathak, told The National.
The $7.7bn — about 35 per cent of the IFC’s account — achieved in the 12 months to June 30 is in line with $7.6bn in aggregate achieved for the same period in 2021, but the multilateral lender aims to surpass the 2022 tally in the current 12-month period.
“The climate change action plan that we presented to the board about 15 months ago is basically that we do 35 per cent of our own account in climate [financing],” Mr Pathak said.
“However, we’ve got ambitious targets as part of our capital increase commitments. Effectively, we have to do more … obviously, as the climate person, I want to do more.”
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The IFC is seeing “new opportunities emerging” in climate credit, and “we are hoping to at least be able to meet that target, if not exceed that 35 per cent that we’ve set for ourselves”, he said.
Compared to commercial banks and some of the other financial institutions, achieving the 35 per cent target is “ambitious, I would argue”, Mr Pathak added.
Climate financing has taken centre stage as the global economy continues its shaky recovery from the pandemic-driven slowdown.
Clean energy investment in developing and emerging economies alone needs to increase by more than seven times — from less than $150bn in 2020 to more than $1 trillion by 2030 — to put the world on track to reach net-zero emissions by 2050, according to a joint report by the International Energy Agency, the World Bank and the World Economic Forum.
The frequency and severity of climate-related disasters have intensified in the past two decades, with droughts in North Africa, Somalia and Iran; epidemics and locust infestations in the Horn of Africa, fires in Australia and severe flooding in Pakistan that killed thousands and racked up damages in excess of $30bn.
The pledge to mobilise $100bn in funding a year from developed countries to developing nations has yet to materialise.
However, if global leaders unite on a systemic net-zero transition, the global economy could get a $43tn boost in the next 50 years, an increase of 3.8 per cent in the size of world economy by 2070, according to a Deloitte report.
