With Trump back in power, World Bank walks a tightrope on climate work

Yahoo

20-04-2025

The World Bank has softened its once-vocal cheerleading for climate action as the Trump administration evaluates its support for international organizations and works to cut funding for climate programs.
As head of the largest public development financier, World Bank President Ajay Banga has been emphasizing jobs and Republican-friendly energy sources like nuclear power and natural gas. He's also defended its climate work when asked, saying recently that the bank's climate investments don't interfere with its core mission of poverty reduction. But that messaging signals a break with Banga's robust public defense of the bank's climate record under President Joe Biden, who nominated Banga in part to bolster green lending.
Former officials and at least five people familiar with the thinking inside the institution, some of whom were granted anonymity to speak candidly, said the bank is downplaying its messaging of climate work out of self-preservation even as its underlying climate policy has not changed.
'Now, do you want to scream this all loudly? Probably not in this environment. You don't get much from doing that,' said Samir Suleymanov, a former World Bank official who directed its strategic initiatives unit.
The bank's messaging on climate represents a delicate balancing act between the institution and the U.S., its largest shareholder. The U.S. has provided significant support for the arm of the bank that serves the world's poorest nations, with the Biden administration pledging $4 billion before leaving office. That funding is still subject to approval in a Republican-controlled Congress, and withholding it would crimp investments to poorer nations struggling with multiple crises ranging from climate change to inflation to food insecurity.
Banga says he hasn't changed anything and is still using the words climate finance to refer to the bank's commitment to put 45 percent of its annual lending toward climate-related projects in fiscal year 2025.
'Remember, we have a board which has representatives of all our shareholders and all these words and thinking go through their system,' Banga said on a call with reporters ahead of the bank's annual spring meetings that start Monday in conjunction with the International Monetary Fund. 'This is a fair debate to have at the board, and then we'll figure out what may change or not change.'
But in recent weeks, he has also talked about an 'all of the above' energy strategy he wants to take to the board in June and has already pressed it to restart investments in nuclear energy, in part, he says, to help power data centers.
'There is no reason why a country in Africa should not care about affordable, accessible electricity,' Banga told reporters Wednesday. 'And it includes gas, geothermal, hydroelectric, solar, wind and nuclear where it makes sense.'
Banga has previously talked about natural gas, often as an example of the divide between developed countries that have grown wealthy on fossil fuels and oil- and gas-rich poorer nations now being told not to exploit those resources.
'The rules of energy access are not applied equally,' he has said. He's also talked about gas as a transition fuel and said in 2023 that 'all we're trying to do is reduce investment in fossil fuels.'
The bank's climate work is occurring as several of the Trump administration's allies want the U.S. to exit the World Bank entirely, arguing that its mission runs counter to American national interest and does China's bidding. A Trump administration review of U.S. participation in international organizations like the World Bank is due in August.
It's a high-stakes game for the World Bank, which must balance previous commitments to put nearly half of its financing toward climate initiatives while avoiding stoking Trump's anger. The bank's green initiatives include measures to help countries adapt to rising temperatures by strengthening infrastructure or supporting drought-resistant agriculture, and aid for the transition to cleaner energy and transportation.
A spokesperson for the World Bank Group said the bank's agenda has long been clear and consistent.
"For two years, we've been working to make the Bank faster, more efficient, and focused on creating jobs," the spokesperson said, noting that jobs are intertwined with clean air and water, reliable power and support for the private sector.
"The realities of the countries we serve—and the diversity of the challenges they face—mean we match solutions to context and rely on every tool at our disposal to deliver," the spokesperson added. "Climate finance—like shifting freight to rail or building drip irrigation—is part of that mix, but no more and no less important than the rest. That's what we've been saying. That's what we've been doing."
Banga, during last week's press conference and in recent speeches, has stressed that projects under the bank's climate financing have broader benefits to a country's economy, leading to job creation and stemming migration.
Banga's climate boosterism only deepened Trumpworld's animosity toward the bank, said Stephen Moore, the conservative economist who co-authored the Project 2025 chapter imploring a U.S. exit from the World Bank. He said the bank's climate agenda diverted it from its development mission, claiming it became harder to finance fossil fuel projects even for people who lack electricity access.
'It was so outrageous that this is what they were doing. It was almost like they wanted to keep countries poor,' Moore said in an interview.
The chances of a U.S. withdrawal from the bank are unlikely, in part because doing so would mean giving up its shares to countries willing and able to buy them, namely China.
But the bank's work on climate and its international focus broadly aren't likely to be overlooked entirely by an administration that has put American energy dominance at the center of its agenda.
That's different from Trump's first term, said Karen Mathiasen, a former acting U.S. representative to the World Bank from 2017-2018 who is now project director at the Center for Global Development.
'There was a much more open attitude towards working with these institutions and kind of focusing on traditional Republican issues like fiscal responsibility,' she said. 'Now everything feels very hostile and adversarial.'
Banga has made a case for the bank's utility, highlighting its efficient use of capital, work to engage the private sector and his moves to refocus toward its core mandate, poverty reduction.
'Our ultimate goal is to help countries build dynamic private sectors that convert growth into local jobs – not by shifting work from developed countries, but by unlocking opportunity where people already live,' he wrote in an opinion piece in the Financial Times published April 1.
It made no mention of climate change, a marked contrast with Banga's earlier op-eds and speeches. In an address at the World Bank and IMF's annual meetings in October 2023, Banga said the world 'cannot endure another period of emissions heavy growth' and filled it with examples of why the bank needed a new playbook to tackle global challenges, of which climate change was central.
'In addition to the efforts already underway to bring more efficiency and focus on core mandates, which may partly address Trump administration concerns, I think there is willingness to go further, especially when it comes to greater flexibility in how the institutions think about energy investments,' said Matt Swinehart, a former Treasury official now a managing director at Rock Creek Global Advisors.
The IMF, the bank's sister organization, has also toned down talk of climate.
Kristalina Georgieva, managing director of the International Monetary Fund and a former environmental economist, didn't mention climate once in her curtain raiser speech on Thursday, focusing instead on trade and global growth.
An IMF spokesperson said the speech 'understandably focused on the most pressing issue facing the global economy at this juncture – the impact of ongoing trade tensions, market volatility and uncertainty on the outlook, and how policymakers should respond in this context.' The spokesperson noted that climate-related events are on the spring meetings schedule.
'I think the institutions right now are walking a tightrope between policing the biggest shareholder and having legitimacy with the rest of the members,' said Kevin Gallagher, director of the Global Development Policy Center at Boston University.
The bank has rolled out changes to extend its lending capacity and introduced Climate-Resilient Debt Clauses, a way for countries to defer loan payments following disasters, as part of its Biden-era reform agenda. It also amended the bank's mission of ending poverty to include the words 'on a liveable planet.' Many of those moves have earned the backing of other shareholders. Banga has also acknowledged that his new energy strategy requires shareholder approval.
Several countries have doubled down on their commitment to support climate through the multilateral banks. France last month said 'a massive scaling up of public finance is needed both to alleviate poverty and protect the planet,' in its 'Paris Pact for People and the Planet,' which vowed to overcome divisions on multilateral development bank boards and the IMF.
Some have welcomed the shift in messaging.
The language around and emphasis on clean energy felt restrictive, boxing out other projects that can reduce emissions, said Suleymanov. The rhetorical shift is merely additive for the bank's climate portfolio, he said, noting that it would not come at the expense of renewable projects the bank has spent years planning with other governments.
'It may sound funny, but there is sort of a relief that this kind of pretend thing is over,' he said. 'The ideological underpinning took so much space. Everybody had the feeling they were caught in the game, like this is something that they have to do, but not necessarily with a clear practical outcome in mind.'