| Paris alignment | Reasoning |
|---|---|
| Some progress | The WBG lacks standalone sectoral strategy documents, instead integrating climate considerations into its sectoral approaches through dedicated webpages. While the WBG has made progress with its Paris alignment methodology and sectoral targets, its references to the Paris Agreement and prioritisation of climate measures remain inconsistent across sectors and policies. |
| Mitigation | Resilience | |
|---|---|---|
| Energy | The WBG’s Energy Sector Directions paper was drafted prior to the Paris Agreement and has not yet been updated to reflect current needs. Despite this, it does refer to the need to support developing economies to transition away from coal. The Bank Group’s institutional documents discuss some mitigation measures for the sector. | The WBG’s institutional documents include some considerations for adaptation and resilience measures for the energy sector. The Climate Change Action Plan 2021–2025 (CCAP) mentions the need to invest in climate-resilient baseload capacity, and to assess climate vulnerabilities of countries and implications to renewable energy investments. |
| Transport | The WBG focuses on reducing transport emissions through the “Avoid–Shift–Improve” (ASI) framework. This approach is implemented through initiatives like the Global Facility to Decarbonize Transport (GFDT) and is reinforced in the 2023 Transport Sector Note on Paris Alignment Assessment Methods. | The WBG has outlined support for climate-resilient actions in the transport sector, but specific examples are lacking. The 2023 Transport Sector Note on Paris Alignment Assessment Methods includes guidance on assessing climate risks in transport projects using the Climate Change Knowledge Portal. However, it’s unclear how effectively climate adaptation and resilience considerations are integrated into practice, as some initiatives labelled as adaptation investments may actually be short-term emergency assistance or disaster recovery funding. |
| Water | The WBG integrates climate mitigation considerations into its water sector investments and technical assistance. This is reflected in their 2022 annual report, and a learning note on ways to improve water delivery systems for energy savings and mitigation efforts. Additionally, the Water Sector Note on Paris Alignment Assessment emphasises low-carbon alternatives and transition risks in the sector. | The WBG has a dedicated Water Global Practice (WGP) with the explicit vision to build resilience within the sector. On Paris alignment, the Bank Group uses multiple climate scenario analyses to assess the adaptation risk of projects. |
| Cities | While mitigation is not explicitly listed as one of the five priorities in the WBG’s urban development strategic approach, the Bank Group has conducted analytical work on urban planning tools for greenhouse gas mitigation. The WBG’s 2021–2025 sectoral targets aim to support 100 cities in achieving low-carbon urban planning and transit-oriented development. However, the Urban, Resilience, Disaster Risk Management, and Land Sector Note on Paris Alignment lacks details on aligning new urban projects with lower GHG alternatives. | The WBG’s urban development strategy prioritises building climate-smart cities and urban resilience, focusing on infrastructure resilience and financing climate strategies. The City Resilience Program helps cities develop financial solutions for climate and disaster resilience. The Urban Sector Note on Paris Alignment includes strong adaptation considerations, assessing climate risks using country-specific data from the Bank Group’s Climate Change Knowledge Portal. |
| Agriculture | While the Agriculture sector note, strategy, and other institutional documents make references to the emissions contribution of the sector, there is little reference to associated potential mitigation measures. It is also not consistently and clearly reflected as a priority. | The Agriculture sector note includes references to the Paris Agreement, climate change, and the need to reduce the exacerbation of existing climate vulnerabilities in agricultural and food systems. Adaptation and resilience are mentioned explicitly, and potential activities for exploration with client countries are also listed. |
Explanation
In 2023, the WBG published eleven sector notes to provide guidance on how the Paris Alignment Instrument Methods (for the WB) and joint MDB Paris Alignment Approach (for IFC and MIGA) apply to sector-specific issues. The sector notes include those on Agriculture and Food; Energy and Extractives; Transport; Urban, Resilience, Disaster Risk Management, and Land; and Water. The notes apply across the WB, IFC, and MIGA. The publication of the sector notes by the WBG is an important step forward and one that has been overdue since the MDBs made the commitment to align their operations with the goals of the Paris agreement in 2017.
Energy
The Energy Sector Directions paper, which sets the course for the WBG’s work in the energy sector, has not been explicitly updated since 2013, before the Paris Agreement was made. In it, the WBG pledges to focus on increasing energy access, along with accelerating energy efficiency and renewable energy, and acknowledges the need to balance energy related development needs with its impact on climate change. The document also states the Bank Group’s policy to phase out coal financing except in “rare circumstances”, with a separate criterion or screening coal projects in place.1 It also outlines the WBG’s commitment to assist governments in assessing their climate vulnerabilities, as the Bank Group acknowledges that climate risk management will be crucial in long-term planning, for example for installations of long-lived large solar panels and power equipment.
More recently, in 2023, the WBG published the report “Scaling Up to Phase Down: Financing Energy Transition in Developing Countries”. The report is a result of the Bank Group’s pledge to align the WBG’s energy sector lending with the Paris Agreement. It can be seen as a follow-up to the Bank Group’s CCAP 2021–2025 which highlights the need to invest in low-carbon and climate-resilient baseload capacity, but lacks detailed implementation guidance. The report considers ways to incorporate resilience into planning for power sector transitions, though it falls short of explaining how the Bank Group will integrate adaptation and resilience considerations into its strategic approach to the sector.
This publication has since been complemented by the WBG’s Energy Sector Note on applying the WBG Paris alignment assessment methods. This includes considerations for lower-GHG emissions alternatives and provides guidance to assess whether proposed projects could create carbon lock-in or prevent the transition to lower-carbon alternatives in the future. It also includes guidance on assessing a project’s exposure to climate change vulnerabilities. However, this is without the requirement to do multiple scenario analyses for assessing potential climate risks that is prescribed by other sector notes. 2
Beyond the previously mentioned policy documents, energy is also a focus in the sectoral five-year targets for 2021–2025. The WBG aims to support 36 GW of renewable energy and 1.5 million GWh-equivalent of energy savings through efficiency improvements. To track progress, the WBG’s New Corporate Scorecard FY24–FY30 includes a dedicated indicator measuring the GW of renewable energy capacity deployed by WBG’s investments and activities. The indicator reflects not only direct investments in physical infrastructure, but also efforts to support private sector investment and government policies enabling infrastructure investment.
Transport
The WBG is the largest provider of development financing for transport globally. It acknowledges that there is an “urgent need to reduce the climate impact of transport […] which contributes 20% of global GHG emissions”. The WBG website has a dedicated landing page which outlines its strategy and results in the sector, stating that it commits billions annually to greener modes of transport and low-carbon and climate-resilient initiatives. While the WBG states that it has supported climate-resilient actions through 179 projects, seemingly under the Transport Global Practice (TGP), the TGP’s brochure does not mention specific projects aimed at enhancing transport networks’ resilience to climate change.
More recently, the 2023 Transport Sector Note on Applying the WBG Paris alignment assessment methods details requirements to assess project risks associated with carbon lock-in and transition. It also outlines the use of the best practice “Avoid–Shift–Improve” (ASI) framework to guide emissions reduction. The WBG outlines how the framework will be used to identify mitigation risks in prospective investments in order to reduce emissions. For example, in the case of urban transport, “Avoid” actions could include encouraging the coordination of transportation and land-use planning, supporting transit-focused development, and implementing pricing strategies to decrease motorised journeys or journey lengths, thereby reducing carbon emissions from vehicles with low occupancy. “Shift” strategies could involve advocating for public transportation and alternative modes of travel, such as creating designated bus lanes in urban or suburban areas and implementing various multimodal solutions. “Improve” efforts may focus on making vehicle fleets more environmentally friendly, facilitating the adoption of electric or other zero-emission transportation options, managing motorisation, and promoting eco-friendly freight logistics. For most of the transport modes covered, the WB presents several options for how this framework can be implemented in practice.
In terms of resilience, the note includes a section on assessing the Paris alignment of transport sector activities through the lens of climate risk, using country-specific information from the Bank Group’s Climate Change Knowledge Portal.
Currently, the WBG has several initiatives supporting investments in the transport sector. Notably, the Global Facility to Decarbonize Transport (GFDT) explicitly uses the ASI framework in its approach to transport decarbonisation and goes one step beyond this with the inclusion of Resilience, which recognises that climate change impacts have and will continue to have an impact on transport infrastructure. Such an addition is reflected in a featured case study, in which the upgraded rail lines in Buenos Aires not only enable the metro systems to transition from diesel to electric power, but are also designed to withstand extreme weather events and other climate risks.
To track the progress of WBG’s work in this sector, the New Corporate Scorecard FY24–FY30 contains an indicator which measures the number of beneficiaries from improved access to sustainable transport due to the WBG’s support.
Water
The WBG has set out the context and strategy for its actions in the water sector on a dedicated webpage. It recognises that “climate change expresses itself through water”, with a focus on water-related natural disasters and a statement that “water must be at the core of adaptation strategies”. Water management for reducing vulnerabilities and building climate resilience is therefore established as a key priority. Three priorities for action are identified:
- Expand beyond traditional integrated water resources management (IWRM) by recognising that access to reliable water resources is essential for successful GHG emissions reduction.
- Promote solutions that integrate “natural infrastructure” – the ecosystem services from healthy watersheds and coasts – to support climate-resilient development in the food and energy sectors.
- Scale up climate resilience by combining watershed management, sustainable infrastructure, and empowerment and learning through adaptive institutions.
For these purposes, the WBG’s Water Global Practice (WGP) focuses on building resilience in the water sector through initiatives and knowledge management. From 2016 to 2023, the WGP knowledge highlights produced reports and tools highlighting resilience measures, such as climate-informed water infrastructure and improved governance for flood and drought management. Its most recent 2022 annual report highlighted the WBG’s work to integrate climate mitigation considerations into its investments and technical assistance work, with examples like installing solar-powered pumps at water points in Somalia and India. It also stressed the importance of sustainable delivery of water services for food production and emissions reduction, including through a 2022 learning note on improving water delivery systems to save energy and boost mitigation efforts.
The WBG’s Water Sector Note on applying the WBG Paris alignment assessment methods emphasises considering low-carbon alternatives, carbon lock-in, and transition risks, as well as the use of multiple climate scenario analyses to assess adaptation risks of projects.3
Cities
The WBG’s urban development strategy outlines five priorities, including building climate-smart cities and urban resilience. This includes a focus on infrastructure resilience and financing climate strategies and analysis of urban areas. Flagship initiatives like the City Resilience Program help cities develop financial solutions for climate and disaster resilience. While mitigation is not one of the five priorities, the WBG has undertaken analytical work on urban planning tools for greenhouse gas mitigation.
The WBG’s Urban, Resilience, Disaster Risk Management, and Land Sector note on applying the WBG Paris alignment assessment methods addresses the lock-in risks of buildings and long-lived assets. It uses the EDGE certification, going beyond local building codes to assess automatic alignment. However, the note lacks details on aligning new urban projects or exploring lower GHG alternatives to meet project needs. It does include strong adaptation considerations, assessing climate risks with country-specific data from the Bank Group’s Climate Change Knowledge Portal. Additionally, the WBG’s 2021–2025 sectoral targets include an aim to support 100 cities in achieving low-carbon and resilient urban planning and transit-oriented development.
Agriculture
The WBG acknowledges that food systems contribute about 30% of global GHG emissions and that climate change will impact future crop yields. In response, it has focused on supporting client governments in developing climate-smart agriculture, with funding for these efforts increasing sevenfold since 2015 (when the Paris Agreement was established). Through its sectoral interventions, the WBG aims to achieve: (1) increased productivity; (2) enhanced resilience (including to climate shocks); and (3) reduced emissions (such as through lower-emission food production methods).
The Agriculture and Food Sector Note on Paris alignment addresses carbon lock-in risks, and lower GHG project alternatives. It also includes climate hazard risk assessments using country-specific information from the Bank Group’s Climate Change Knowledge Portal. The Bank Group also recommends a non-exhaustive list of risk reduction measures in the face of exacerbating climate vulnerabilities, such as the use of agro-climatic data information systems, and stakeholder engagement on climate resilience.
As part of its 2021–2025 sectoral targets, the WBG aims to expand integrated landscape management in up to 50 countries, covering up to 120 million hectares of forests. Progress is tracked through the WBG’s New Corporate Scorecard FY24–FY30, which now measures terrestrial and aquatic areas under enhanced conservation and management, excluding areas managed as offsets for project-related biodiversity impacts.
Recommendations:
- The WBG should consider connecting its work on water sector resilience to its continued support to countries in developing National Adaptation Plans (NAPs) from country NDCs. Currently, it is unclear if these two branches of work are interconnected. More broadly, the WBG should anchor sector-level engagement on adaptation and resilience to NAPs, using them as a common framework for aligning interventions with national priorities and enhancing coordination among development partners.4
- While the WBG acknowledges the impact of cities in global GHG emissions, it should also consider incorporating mitigation as one of the key priorities for action in its sectoral strategy. In this sense, programs to reduce GHG emissions in cities will not be considered as one-off initiatives by project teams, but part of the WBG’s strategic focus on climate change.
- Given that the Energy Sector Directions paper has not been updated since 2013, the WBG should consider issuing an update reflecting the alignment of the WBG’s operations to the Paris Agreement, to complement the full Paris alignment methodology and energy sector note. This would also provide an opportunity to set out explicit prohibitions for financial intermediaries to fund coal-related projects and comprehensive transition criteria to be applied across prospective fossil fuel projects, as an interim step towards phase-out. For the latter, the WBG could draw on leading policies from institutions such as the FMO.
1 For more details and E3G’s analysis of the WBG’s coal policies, please see the “Fossil fuel exclusion policies” metric.
2 For more detailed analysis of the energy sector note, see the “Fossil fuel exclusion policies” metric.
3 Notably, water supply activities are for the most part considered “universally aligned”, as long as they don’t “rely on the on-site use of fossil fuels”. In principle this implies that only scope 1 (and not scope 2 or 3) emissions are consistently accounted for in determining alignment.
4 See the “Country level work” metric for further details regarding how country platforms can facilitate coordinated donor support in response to country-driven climate and development priorities.