In a significant milestone for global climate initiatives, the World Bank Group announced on September 22, 2024, that it has achieved a record $42.6 billion in climate finance for fiscal 2024. This represents a notable 10% increase from the previous year’s total of $38.6 billion, moving closer to the bank’s target of allocating 45% of its total financing towards climate-related projects.
Despite this progress, the $4 billion increase underscores a larger challenge: the urgent need for trillions of dollars in additional resources annually to facilitate the clean energy transition in emerging markets and developing countries. The scale of investment required highlights the ongoing gap between current funding levels and the financial support necessary to combat climate change effectively.
World Bank President Ajay Banga has implemented various measures to enhance the bank’s financial capabilities, including increasing balance sheet leverage and capital adequacy adjustments. These efforts aim to generate an additional $10 billion to $12 billion in annual lending capacity over the next decade, targeting not only climate change but also other pressing global issues such as pandemics, while maintaining the bank’s core mission of poverty alleviation and development.
Looking ahead, the World Bank has committed to directing 45% of its total lending in fiscal 2025, which began on July 1, towards climate adaptation and mitigation efforts. This commitment encompasses a diverse range of projects, from cyclone shelters in Bangladesh to the development of electric bus rapid transit systems in Cairo, Egypt, and Dakar, Senegal.
The climate finance contributions for fiscal 2024 include:
- International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA): Together, these two arms delivered $31 billion in climate finance, with $10.3 billion specifically aimed at investments in adaptation and resilience.
- International Finance Corporation (IFC): The private sector lending arm contributed $9.1 billion in long-term climate finance.
- Multilateral Investment Guarantee Agency (MIGA): This branch provided $2.5 billion in climate finance for the fiscal year, focusing on political risk insurance and credit enhancement.
While the record figures signal a positive trend in climate financing, the World Bank acknowledges that significant additional resources will be necessary to meet the demands of the global clean energy transition. The commitment to increasing climate finance remains critical in the face of an evolving climate crisis.
