This page is part of the E3G Public Bank Climate Tracker Matrix, our tool to help you assess the Paris alignment of public banks, MDBs and DFIs.
|Some progress||Leadership in a number of areas such as supporting finance ministries and evidence of thought leadership.|
Following the announcement of current World Bank President David Malpass that he will resign at the end of June this year (one year ahead of finishing a full term) the United States announced their nomination for the next World Bank President. Ajay Banga, former CEO of Mastercard is President Joe Biden’s pick for the position. The selection of Banga was a shock to many. The White House statement on the nomination touts Banga as “a business leader with extensive experience leading successful organizations in developing countries and forging public-private partnerships to address financial inclusion and climate change”. At a time when the World Bank is looking to make extensive institutional reforms, Banga will need to lead the ongoing reform process and balance both the priorities of addressing development and global challenges.
The World Bank Group, including the IFC, has demonstrated leadership in a number of areas, particularly as a thought leader in emerging areas.
Most recently, in response to the COVID-19 pandemic and its effects on financial systems, the World Bank has produced a Sustainability Checklist. The checklist is not only concerned with climate, but instead is broken down into six considerations that the Bank suggest actors consider when investing in projects: in the short term, considerations include job creation, boosting economic activity as well as timeliness and risk; in the long term, considerations include long-term growth potential, resilience to future shocks as well as decarbonisation and sustainable growth. Earlier in the development of the Checklist, the Bank proposed that COVID-19 stimulus should integrate NDC goals to best meet the challenges set out for public and private funding bodies, and we recommend that this be included in the final version of the checklist. This guidance shows the role of the World Bank as a thought leader on global challenges.
The World Bank Group has been active in promoting green financial systems and increasing awareness of green finance and climate change through the Climate Action Peer Exchange for Finance Ministries. The CAPE Initiative is identified as pioneering as this is a forum for peer learning, and mutual advisory support bringing together technical specialists from finance ministries across the world. This support includes information sharing and capacity building amongst finance ministers to encourage their involvement in green fiscal policy; reviewing and revising NDCs and carbon pricing policy; and developing tools to help finance ministers “green” their fiscal policy.
The scope of the initiative includes fiscal risks, fossil fuel subsidy reform, as well as climate budgeting techniques (see below). Recently, it has taken on the role of broad technical assistance. This coalition of 52 countries has endorsed a set of six common principles, known as the “Helsinki Principles”, which promote Paris alignment, best practice sharing, carbon pricing, macroeconomic policy, mobilisation of private finance and engagement with NDCs. To complement the Helsinki Principles the Coalition published its Santiago Action Plan in late 2019. The Overview of the plan lays out 2020 priorities for the group, including transitioning to climate-resilient economies, developing finance ministers’ role in climate policy and developing the financial sector to support mitigation and adaptation. The Coalition recently release a Joint Ministerial Statement reinforcing their commitment to the Helsinki Principles, however, the coalition has yet to show progress and impact.
Climate Action Peer Exchange (CAPE)
Established at COP22 in 2016, the CAPE Initiative is a knowledge exchange forum for finance ministries to discuss the fiscal challenges and good practices in implementing the NDCs under the Paris Agreement. Focus areas of the CAPE initiative include fiscal instruments for low-carbon growth (e.g. carbon pricing, emissions-trading systems, fuel taxes); macroeconomic modelling to forecast economic growth and public-debt trajectories under alternative strategies; and fiscal risk assessments. It is financed by the NDC Partnership Support Facility and the Bank’s South-South Facility. CAPE is partnered with the Green Fiscal Policy Network, a partnership between UNEP, IMF and GIZ, to facilitate knowledge sharing and dialogue on fiscal policies for an inclusive green economy.
Moreover, the Carbon Pricing Leadership Coalition – co-led by the World Bank and IMF – is another initiative which is identified as potentially pioneering and transformational, as it spurs on efforts to expand carbon pricing, the Bank has adopted internal carbon pricing within its own project assessment process. The Coalition’s goals are centred around enhancing knowledge and research around the need for carbon pricing as well as mobilizing business and stakeholder engagement.
Despite these leadership areas, the Bank is held back by key programmes that are directly misaligned with the Paris Agreement. These include technical assistance to fossil fuels (see ‘Technical assistance for implementing Paris goals’ page), fossil fuel financing programmes (see ‘Fossil fuels’ page) and energy efficiency standards (see ‘Energy efficiency strategy, standards and investment’ page).