World Bank

Standalone climate strategy and integration of climate in overarching strategy

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.

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Paris alignmentReasoning
Some progressThe overarching strategy includes both mitigation and adaptation, and also acknowledges that climate is a threat to poverty reduction. Focus is now needed on implementation in all parts of the Bank’s activities, including technical assistance, and specific incorporation of Paris alignment and the “do-no-harm” principle.
Standalone climate strategyOverarching strategy
The World Bank Group (WBG) has a comprehensive standalone climate strategy. It misses a clear commitment to Paris alignment and the “do-no-harm” principle.The WBG has published multiple forward-looking strategic documents referring to climate action and decarbonization. However it is unclear to what extent these influence the current strategic positioning of the Bank.

Explanation

Overarching strategy

Climate change was integrated into the 2017 WBG ‘Forward Look: vision for 2030’. This is the World Bank Group’s strategic vision document for 2030. This reinforces the Bank’s commitment to the implementation of its Climate Change Action Plan (CCAP) approved in 2016.

The World Bank Group has also published the 2050 Strategic Directions Note focusing on long-term country strategies for decarbonization. The comprehensive document outlines challenges and opportunities, as well as risks on the pathway toward a decarbonized global economy. The document is clearly referencing the Paris Agreement and aims to pick up on its pledges. It further details how the Bank will support countries to meet their long-term decarbonization goals through country programs, technical assistance, lending and knowledge products.

Climate was one of a number of special themes in the IDA19 capital replenishment. This states that all Strategic Country Diagnostics since 1 July 2017 have incorporated climate and considered the NDC. IDA committed to thos in the Forward Look and in the IDA18 capital replenishment. The document also contains several references to the Paris Agreement.

The World Bank Group’s “COVID-19 Crisis Response Approach Paper” also mentions climate, with a particular focus on climate resilience in a number of areas. The document states that “maintaining a strong focus on climate change in the early stages of crisis response is critical to maintaining a line of sight to long-term goals”. It also has a specific reference to NDCs where it states “rebuilding better entails focusing on countries’ climate change objectives. These are expressed in Nationally Determined Contributions [ … and] National Biodiversity Action Plans”. Other than this reference to NDCs the document does not refer to the Paris Agreement.

The Approach Paper also makes two interesting comments. The first is around how higher debt could impact climate action where it states that “higher debt, public and private, could make it more challenging to mobilize finance for climate action”. The following paragraph also has implications for investments in fossil fuels: “To support job creation and preserve growth-oriented enterprises, it will be important to promote reallocation of resources to more efficient companies, restructure and recapitalize firms, and avoid measures that risk propping up unviable firms or declining industries. For example, as countries and markets shift toward low carbon and renewable energy, as part of efforts to support climate adaptation and mitigation, it will be important not to slow this shift by subsidizing energy-inefficient industries and others at risk due to this changing policy and market environment.”

The Multilateral Investment Guarantee Agency (MIGA) also has a specific focus on climate change in its business plan. MIGA is in the process of reviewing its Strategy and Business Outlook, including its climate change component.

Although the documents above taken together show good progress has been made in mainstreaming climate in the WBG’s overarching strategy documents, more could be done in the specific area of mainstreaming the concept of Paris Agreement alignment. Over the last few years progress on the implementation of the Paris Agreement within WBG processes appears to have slowed, and this is something that the WBG needs to accelerate in order to achieve Paris aligned status.

Standalone climate strategy

The WBG Climate Change Action Plan (CCAP), published in 2016, recognizes that climate change is a threat to its core mission of ending extreme poverty and promoting shared prosperity as it is going to affect the most vulnerable people, and climate impacts could push an additional 100 million people into poverty by 2030. The action plan aims to demonstrate how the WBG is going to meet the challenges and opportunities posed by climate change, providing concrete actions to help countries address current and future climate risks and opportunities.  The plan also recognizes that countries have different starting points and need differentiated support. Providing policy and institutional support for national investment plans and facilitating private sector initiatives is noted as critical to having an impact.

Within the Climate Change Action Plan, more emphasis is placed on adaptation to impacts than mitigation of emissions. For example, the plan states the World Bank’s “Systematic Country Diagnostics (SCDs) and Country Partnership Frameworks (CPFs) will consider the risks and opportunities created by climate change and countries’ climate priorities” but this does not specifically mention mitigation. Moreover, on transport there is a “strong focus on enhancing the resilience of the road portfolio” but the electric vehicle transition is not mentioned within the document even though transport is one of the most important sectors for decarbonization. The plan does not refer to deep decarbonization or supporting countries with long-term 2050 planning.

The World Bank is currently undergoing a review of its Climate Change Action Plan 2016-2020 and work on the next Climate Change Action Plan 2020-2025 has already begun internally. This assessment will be updated once the new action plan becomes available.

Recommendation: The World Bank Group should fully integrate the principle of Paris Agreement alignment in its new Climate Change Action Plan and its overarching strategies, and set a date for when it is going to be 100% Paris aligned.

 


 

Last Update: November 2020

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