On June 22, 2021, the World Bank Group declared its latest Climate Change Action Plan that strives to give record levels of environmental finance to developing countries, reduce the path of emissions, align financial flows, and strengthen adaptation with the objective of the Paris Agreement. Moreover, the Action Plan for 2021 to 2025 expands the World Bank Group efforts from spending on “Green Projects” to support countries thoroughly combining their climate and development goals. The Plan also emerges as countries look for sustainable pathways out of the disturbance generated by the COVID-19 pandemic.
World Bank Group President David Malpass said, “Our latest Climate Action Plan will recognize and prioritize action on the most effective reduction and adaptation opportunities, and we will manage our climate finance, respectively. That means helping the enormous emitters destroy the emissions curve and assisting countries to achieve successful adaptation and flexibility to climate change.” Further, he added, “We’ll distribute climate finance at record levels and explore solutions that help to achieve the most impact.”
Some other key highlights of the Action Plan are:
- Already, the World Bank is the most significant multilateral supplier of climate finance for the growing countries. Therefore, the Plan involves a commitment to increase delivery to an aggregate of 35% of the total World Bank Group financing for climate across the duration of the proposal. More than 50% of the International Development Association (IDA) and International Bank for Reconstruction and Development (IBRD) climate finance will support modification.
- Encouraging assistance to countries for renewing and implementing their Nationally Determined Contributions and Long-Term Strategies compatible with the Paris Agreement and arranging incentives by decreasing the subsidies and increasing taxation of greenhouse gas emissions.
- They recognize and prioritize high-impact climate action possibilities to notify future World Bank Group climate investments and engagements. In addition, a new core diagnostic tool, the Country Climate, and Development Report (CCDR) will assist countries to align climate action and development efforts while absorbing new climate-related technologies as they appear.
- Emphasizing action in critical systems- energy, agriculture, water, food, and land; cities; transportation; and manufacturing must be converted to address climate change, attain a resourceful and low-carbon future, and support natural capital and biodiversity protection. The Action Plan will emphasize the importance of a “just transition” away from coal.
- Furthermore, catalyzing and mobilizing private capital for climate action; increasing efforts to develop carbon credit markets, green bonds, and loan markets in countries. In addition, providing support for global public goods in the poorest countries through IDA funds and other sources.
- Adjusting all World Bank Group financing flows with the goals of the Paris Agreement to raise the country’s climate commitments. Apart from this, The World Bank comprises the International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) that will align all the latest operations starting on July 1, 2023. Besides, for the World Bank Group’s private sector development arms, IFC and MIGA, 85% of the Board approved real sector operations will be regulated starting July 1, 2023. In addition, 100 % of these operations beginning on July 1, 2025, two financial years later.
- Countries need Investments to assist actions that meet climate goals while also helping their development requirements. Moreover, creating such initiatives requires innovation and the addition of initiatives that are distinct from business as usual. Climate changes demand governments and investors like the World Bank Group to proactively search for plans, promote, develop, and scale projects. Also, it wants project developers to use new models, data, and assumptions to associate that promote social, economic, and environmental benefits.
The World Bank Group will constantly update its Board on the implementation of the Action Plan. The latest Action Plan forms on the World Bank Group’s achievements beneath its first Climate Change Action Plan, which distributes over $83 billion in climate investment over five years, containing a record $21.4 billion in 2020.
Additionally, the Climate Change Action Plan is the World Bank Group’s opportunity to take a massive step towards global leadership on the environmental crisis. It should take this chance to more clearly justify how it will act vigorously and decisively, with clear and measurable goals for investments, emissions, etc., to support countries’ shift to climate-compatible futures.