The World Bank’s work to tackle climate change is under threat as the Trump administration pushes the lender to ditch its green targets and step up support for fossil fuel infrastructure in the developing world.
With the World Bank’s key climate policy framework set to expire in June, closed-door negotiations between shareholders and the bank’s management over its successor have stalled, sources familiar with the discussions told Climate Home News.
This throws into doubt the future direction of the world’s largest provider of international climate funding to developing countries. Rajneesh Bhuee, just transition lead at campaigning group Recourse, said that scrapping the bank’s climate targets and markers would be “worrying”.
First introduced in 2021, the Climate Change Action Plan (CCAP) has driven an expansion in the World Bank’s funding for emission-cutting projects and support for vulnerable communities dealing with the growing impacts of climate change.
The plan embedded climate considerations across the bank’s lending practices and committed it to directing a defined share of its annual budget – now 45% – to projects with climate benefits.
Since the plan was introduced, the World Bank’s climate funding nearly doubled from $21 billion in 2021 to $39 billion in 2025.
Bessent attack on climate
That trajectory is now under threat. Since Donald Trump’s return to the White House, the US – the bank’s largest shareholder – has waged an aggressive campaign against its climate commitments.
US Treasury Secretary Scott Bessent said on Wednesday that the World Bank should abandon its “distortionary” climate finance target, claiming without evidence that it “undermines efforts to reduce poverty and spur economic growth”.
“We welcome the coming expiration of the Climate Change Action Plan, and upon its long-overdue expiration, expect the bank to immediately shift its myopic focus on climate,” he added in the statement issued during the World Bank’s Spring Meeting in Washington DC this week.
Earlier in the week, Bessent pushed back against the scientific consensus that human activities, and the burning of fossil fuels in particular, are the dominant drivers of global warming.
Progress called into question
With negotiations heading for a crunch, battle lines are hardening. Sources familiar with discussions told Climate Home News that European countries, backed by some Latin American nations and small island states, are holding firm in their push to see a version of the climate plan extended.
But nations reliant on the production of fossil fuels, like Russia and the Gulf States, have sided with the US, they said. The decision will ultimately be taken by the bank’s management, led by Biden appointee Ajay Banga, but with powerful advice from the governments that make up the bank’s shareholders.
Jon Sward, environment project manager at the Bretton Woods Project, said that any watering down of the World Bank’s climate agenda would be damaging.
“Over the past decade until last year, the scope and depth of the bank’s climate work, though still imperfect, had been expanding. That feeling of progress is being called into question,” he told Climate Home News.
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Multilateral development banks (MDBs) led by the World Bank have been handed an increasingly central role in providing funding for climate action to developing nations, as many rich governments channel a large share of their climate finance through the MDBs.
MDBs accounted for over 40% of public international climate finance in 2022, the latest year for which data is available. Growing support from MDBs and shrinking overseas aid budgets in developed countries suggest their role is likely to have grown even bigger since then.
‘Imperfect’ plan better than no plan
The World Bank’s climate approach has faced repeated criticism. Activists accused the lender of relying heavily on loans and adding to the debt piles of vulnerable countries, and of inflating its climate finance numbers by overstating the real climate benefit of its projects.
But Recourse’s Bhuee, said that, despite its flaws, a weak climate action plan is still better than no climate action plan. “Imperfect as the current plan is, it provides a basis for accountability,” she added.
While experts do not expect an immediate drop in climate funding, the removal of formal targets could weaken internal incentives to prioritise climate projects and reduce transparency over how funds are allocated.
In the short term, it would give the US administration a big symbolic win in its wide-ranging quest to hollow out international financing for climate action and boost support for planet-warming fossil fuels.
Gas compromise
“The US strategy is to run out the clock,” an expert with knowledge of the discussions told Climate Home News. “It is using the June deadline to either get rid of the plan altogether or as leverage to extract concessions on a weakened climate plan in exchange for something else like funding upstream gas”.
The World Bank committed to stopping support for gas extraction projects in 2019, but that ban has been reconsidered since Trump’s return to office. Bessent said on Wednesday that the World Bank should support an “all-of-the-above” approach to energy, including gas, oil and coal.
“The US has outsized importance over the World Bank’s policy,” the expert said, “but it is incumbent on the European shareholders to show some spine here”.
