The World Bank Group announced that it will retire its goal of dedicating 45% of annual lending resources to projects with climate co-benefits. The development lender will instead extend its long-standing Climate Change Action Plan (CCAP), which was due to expire on Tuesday, while shifting focus from input targets to lending outcomes.
The decision follows sustained pressure from the United States administration, which has urged international financial institutions to return to their core missions of economic development and financial stability.
US Treasury Secretary Scott Bessent had previously criticised the bank’s focus on climate financing targets, calling it myopic. Under the leadership of President Ajay Banga, the bank is shifting towards a strategy of “smart development,” prioritising job creation alongside climate-resilient infrastructure, drought-resistant agriculture, and renewable energy.
The policy shift has revealed divisions among the bank’s international shareholders. While executive directors representing France and 18 other nations previously signed a letter supporting continued climate-focused lending, the United States, Russia, Kuwait, and Saudi Arabia declined to sign, and India and Japan abstained.
Despite dropping both the 45% target and a previous 35% benchmark, World Bank officials noted that demand for projects with climate benefits remains strong among client countries. The lender’s Independent Evaluation Group will now conduct a full review of the CCAP framework, which was first established in 2016.
