The World Bank Promises to Revamp Its Climate Finance Tracking. We Have Some Recommendations.

On June 14, we published a paper titled “What Counts as Climate?” where we argued that the World Bank has developed a climate portfolio that lacks estimates of greenhouse gas (GHG) emissions reductions and has no standardized reporting on GHG estimates. Further, hundreds of projects tagged climate—many in poorer countries—appear to have little to do with climate change mitigation or adaptation. In the paper, which was widely covered in the media, we listed hundreds of projects tagged with a small climate co-benefit to demonstrate our case. We also listed large projects with funding tagged as 100 percent related to climate change that had little to no discussion of impact on GHG emissions. We were also unable to verify the Bank’s topline numbers on emissions reductions. Last week, the World Bank sent an email to members of civil society, indicating:

…we are enhancing the way we track climate outcomes that goes beyond measuring the volume of our climate co-benefits to primarily measuring the impact of our financing. This approach will build on our work to develop mitigation, adaptation, and resilience outcome metrics and will measure how we help countries move to a low-carbon future. We will work with top experts to design these metrics and partner with other Multilateral Development Banks. The goal is to launch a new climate outcome platform later this year at COP 28.

In order to help the Bank demonstrate that its strategy is being translated into well targeted operations with clear outcomes and outputs, we recommend:

1. A meaningful accounting of climate spending that is transparent and easy to understand. Project level estimates of GHG emissions reductions must be documented so that topline numbers reported in the Bank’s annual scorecard can be verified.

2. A clear definition of  adaptation. The Bank may choose to define climate adaptation projects narrowly to include only those that directly address the consequences of some observed or anticipated change in climate. Or the Bank could argue that general economic development has major climate resilience co-benefits. It is empirically true that general economic development is strongly associated with decreased vulnerability to climate.

3. A rationale for every project tagged climate, as to why the project reduces emissions or helps countries adapt to climate change. This rationale should be clearly stated in the project summary.

4. A justification for taking credit for projects tagged with low climate shares. The Bank might even consider discarding this type of tagging as it is analytically weak and makes climate co-benefits hard to assess.

We commend the World Bank for improving its tracking of climate finance and look forward to the launch of the World Bank’s new climate outcome platform at COP28.