World Bank reform crucial “update” for organisation's role in climate ... - Clean Energy Wire
World Bank reform crucial “update” for organisation’s role in climate action - German dev min | Clean Energy Wire
World Bank reform crucial “update” for organisation’s role in climate action – German dev min
Clean Energy Wire
The agreement among shareholders of the World Bank on a reform that will facilitate investments in climate action and development assistance projects is a sign that significant changes can be achieved through cooperation in international organisations, Germany’s development minister Svenja Schulze said. “This updates the World Bank to meet the requirements of our times,” said the Social Democrat ( SPD) minister, who helped initiate the reform in 2022 in her role as governor. “We can only fight poverty if we simultaneously protect the natural basis of existence,” Schulze added. The World Bank’s role in promoting the energy transition, protecting rainforests or preventing pandemics has been greatly increased with the decision, Schulze argued, pledging that she will closely scrutinise the reform’s implementation.
The package adopted by World Bank representatives at a meeting in Morocco includes a new guiding principle (“A world free of poverty on a livable planet”); adapts criteria to support investment in climate and environmental protection, peacekeeping and pandemic prevention; and incentivises states to safeguard national resources for humanity rather than exploiting them for national gains. This could be achieved through favourable credit conditions or so-called “climate resilient debt clauses” that allow temporary leniency regarding repayments to countries hit by natural disasters. The reform also includes the introduction of so-called hybrid capital, which is supposed to raise an additional 2.4 billion euros over the next ten years to be invested in global development and protection goals.
The total increase in funding generated through the reform could exceed 50 billion U.S. dollars within the next decade, Germany’s development ministry (BMZ) said. “This reform makes the World Bank a better bank,” Schulze said, adding that the revision should set an example for similar undertakings in other global organisations. “We will not scale down our efforts and keep our gaze beyond the World Bank to achieve improvements throughout the entire system of development banks,” the minister added.
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Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”