New leader revamps World Bank to meet climate crisis

DUBAI, United Arab Emirates — For years now, heads of state and government, academics and development experts have been calling on the World Bank to lead in the fight against climate change.

For too long, they say, the international lender had ignored the growing threats posed by rising temperatures and sea levels, been too conservative with its lending to developing countries struggling with climate disasters, and spent too much money supporting fossil fuels, the burning of which is dangerously heating the planet.

Prime Minister Mia Mottley of Barbados led the charge, rolling out an agenda known as the Bridgetown Initiative and rallying others, including President Emmanuel Macron of France, to join her.

At the United Nations climate talks in Dubai, which began Nov. 30 and run until Tuesday, it is clear that much is changing at the World Bank.

Ajay Banga, 64, the former CEO of Mastercard, took over as president in June. He replaced David Malpass, who was nominated by President Donald Trump and stepped down early after coming under fire for disputing the science of climate change in a live interview with The New York Times.

And while the World Bank has not instituted the sort of sweeping overhaul envisioned by its most ardent critics, Banga, an Indian-born American, has over the past six months made a series of changes that he said are aimed at addressing the climate crisis.

As the planet warms and storms, drought, wildfires and flooding grow more extreme, poor countries are in a particularly difficult spot. They are desperate for funds to recover from climate disasters while also starved for money to prepare for the next calamity. They are saddled with debt, yet need to invest in a transition away from fossil fuels so they can lower the emissions that are heating the planet and causing so much damage in the first place.

The International Monetary Fund has also been accused of not doing enough to help countries adapt to climate change, and of burdening poor nations with debt, and has made some modest changes. But, under Banga, the World Bank has leaned into its climate work.

Just weeks after he took over, the bank said it would pause debt and interest payments for countries hit by natural disasters, including hurricanes and wildfires made worse by global warming.

A full 45% of the bank’s lending is now going toward climate-related projects, including new renewable energy construction, up from 36% the previous year.

The World Bank is piloting new efforts to reduce methane emissions and help poor countries create accountable marketplaces for carbon credits.

The bank agreed to serve as the home of a new, socalled loss and damage fund that will distribute money to poor countries that have suffered irreplaceable losses because of climate disasters.

And Banga has been working to streamline a bureaucratic and siloed organization, pushing it to move faster and stressing collaboration.

“This is all sensible stuff,” Banga said in an interview. “The fact is, we should have a vision that is redefined from the past, and that includes addressing global crises and having a livable planet.”

Outside observers have so far been broadly supportive of Banga.

“Ajay is trying to put climate and reduction of vulnerability across the world front and center,” said Hilen Meirovich, head of climate change at IDB Invest, a development bank. “There’s a lot of commitments and collaborating and testing that is happening.”

Hans Peter Lankes, the managing director of ODI, a global affairs research organization, worked at the World Bank until a few years ago and said the institution has been transformed under Banga.

“If you talk to anyone in the World Bank, the atmosphere has changed enormously,” he said. “The whole sense of purpose has changed.”

Banga appears to have forged a bond with Mottley. The two met for the first time early this year, in an airport lounge in London. They bonded over a shared love of cricket, a sport popular in both of their birth countries, and Mottley outlined her vision on how the bank should change. Since then, they have become friendly and have appeared together multiple times.

“We’ve not been that bothered about whether it’s called Bridgetown or not,” said Avinash Persaud, the Barbados climate envoy. “It’s a collection of ideas. It is a vision of finance. And I would say the victory of 2023 has been that this new climate financial system has emerged.”

Yet there is only so much Banga can do on his own. At the end of the day, the World Bank is governed by its shareholders: the United States, China, Germany, France, Japan and other major economies.

Without those countries agreeing to contribute more capital and accept more risk, the bank will be limited in how much money it can make available for developing countries trying to adapt to climate change.

Fossil fuel lending by the bank has decreased, but it persists as many developing countries continue to seek economic growth through new oil and gas projects.

“The easy, low-hanging fruit is being picked off,” said Manish Bapna, CEO of the Natural Resources Defense Council. “Now it’s the bigger fruit we have to play for.”