The World Bank Group has announced that it is abandoning its commitment to allocate 45 per cent of its annual lending to projects delivering climate co-benefits, marking a significant shift in the institution’s climate finance strategy. The decision ends a target introduced in 2023 as part of the Bank’s Climate Change Action Plan and signals a greater emphasis on country-specific development priorities.
In a statement, the World Bank said it would retire both the 45 per cent climate co-benefits target and the broader 35 per cent target under its Climate Change Action Plan. Instead, future climate-related investments will be driven by client countries’ ambitions and supported through the institution’s knowledge and technical assistance, while remaining aligned with countries’ international climate commitments.
The move represents a notable departure from recent climate financing policies. In 2019, the World Bank committed to ending financing for upstream oil and gas projects, while allowing limited support for natural gas investments in countries with pressing energy needs and limited short-term renewable alternatives, provided such investments did not create long-term carbon dependence.
The policy change follows sustained pressure from the administration of U.S. President Donald Trump to remove the Bank’s climate lending target. As the World Bank’s largest shareholder, the United States holds approximately 16 per cent of the voting power in the International Bank for Reconstruction and Development (IBRD) and retains veto power over certain structural decisions, giving Washington significant influence over the institution’s strategic direction.
The decision is expected to spark debate over the future of multilateral climate finance, particularly as developing countries continue to seek funding for both climate resilience and economic development. While the World Bank maintains that climate outcomes will remain an important objective, the removal of formal lending targets signals a more flexible approach that prioritises country demand over institution-wide climate financing benchmarks.