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The World Bank has scrapped its headline climate finance target under pressure from the Trump administration, but experts believe the survival of its wider climate programme should preserve support for clean energy and resilience in developing nations.
Following tense negotiations between its government shareholders, the global lender announced this week it would extend its Climate Change Action Plan (CCAP) while “retiring” its commitment to direct 45% of its financing to projects with climate benefits – a target it has already met.
“It could have been a lot worse,” said Danny Scull, a senior policy advisor at think-tank E3G. “I would have loved to see the most ambitious outcome possible, but it is far less likely we’ll see a scenario where the bank all of a sudden reverses its current trajectory and starts delivering less on climate,” he added.
Introduced in 2021, the CCAP has been credited with overhauling the World Bank’s approach to climate finance after years of criticism over the development finance institution’s lukewarm support for cutting planet-heating emissions and building resilience to extreme weather and rising seas.
Since the CCAP began, the World Bank’s climate finance nearly doubled to $39.2 billion in 2025, with 48% of its financing showing climate “co-benefits” and exceeding the target first set at COP28.
The World Bank has scrapped its headline climate finance target under pressure from the Trump administration, but experts believe the survival of its wider climate programme should preserve support for clean energy and resilience in developing nations.
Following tense negotiations between its government shareholders, the global lender announced this week it would extend its Climate Change Action Plan (CCAP) while “retiring” its commitment to direct 45% of its financing to projects with climate benefits – a target it has already met.
“It could have been a lot worse,” said Danny Scull, a senior policy advisor at think-tank E3G. “I would have loved to see the most ambitious outcome possible, but it is far less likely we’ll see a scenario where the bank all of a sudden reverses its current trajectory and starts delivering less on climate,” he added.
Introduced in 2021, the CCAP has been credited with overhauling the World Bank’s approach to climate finance after years of criticism over the development finance institution’s lukewarm support for cutting planet-heating emissions and building resilience to extreme weather and rising seas.
Since the CCAP began, the World Bank’s climate finance nearly doubled to $39.2 billion in 2025, with 48% of its financing showing climate “co-benefits” and exceeding the target first set at COP28.
With the CCAP due to lapse at the end of June, the US – the World Bank’s largest shareholder – mounted a campaign for the lender to axe the programme entirely. Last April, US Treasury Secretary Scott Bessent publicly welcomed the plan’s upcoming expiration, urging the bank to “shift its myopic focus on climate” and abandon its “distortionary” 45% climate finance target.
But Washington was left increasingly isolated during protracted negotiations in recent months as both European governments and a wide-ranging coalition of developing countries held firm on the plan’s extension, sources with knowledge of the discussions told Climate Home News.
In May, executive directors representing a bloc of nearly 100 countries, including China, Brazil, Saudi Arabia and Russia, sent a letter to the World Bank’s board requesting the CCAP be extended and calling for an independent review of the programme.
While the US had previously seemed unwilling to compromise with its European counterparts, that intervention got it to “back off from its most extreme positions”, E3G’s Scull said.
In its statement on Monday, the World Bank Group said it would place less weight on theamount of money flowing into projects with climate benefits and shift its focus to “outcomes”, including indicators such as greenhouse gas emissions avoided and the number of people better shielded from climate risks.
The UK’s international development minister, Jenny Chapman, said in a this week that the extension of the CCAP is “a critical step forward”, adding that the stronger emphasis on results “is essential to ensure maximum impact, and the UK will hold the Bank to account to ensure delivery”.
Despite ditching its headline goal, the international lender is still expected to keep counting the volumes of climate finance for the vast majority of its activities. That’s because the individual entities belonging to the group continue to have their own climate targets embedded in their current mandates.
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For example, the International Development Association (IDA), which supports the world’s poorest nations, has to climate-related activities until 2028. And its larger lending arm, the International Bank for Reconstruction and Development (IBRD), should keep aiming for 30% of its financing to have climate benefits.
Joe Thwaites, a climate finance expert at the Natural Resources Defense Council (NRDC), said these targets “can be a backstop against the bottom falling out”. “Client countries are emphasising that they want to see more investments in clean energy and resilience,” he added.
The World Bank’s provision of climate finance is also crucial for wealthy countries’ efforts to meet a commitment to provide $300 billion a year for developing countries by 2035 under the new UN climate goal agreed at COP29 in 2024.
That year, multilateral development banks (MDBs) accounted for around half of all climate finance provided by developed countries under the previous $100-billion-a-year goal, according to calculations by the Organisation for Economic Co-operation and Development.
UK development minister Chapman said this week that the bank “must continue to meet the expectations of the wider international community, including those set out at COP29”. There, MDBs said that by 2030, their annual joint climate financing for low- and middle-income countries would reach an estimated $120 billion.
Fractious COP29 lands $300bn climate finance goal, dashing hopes of the poorest
Rajneesh Bhuee, just transition lead at campaign group Recourse, said it was a “blow” that the World Bank’s headline target had been dropped, but she doesn’t expect to see climate financing reducing – at least in the short term.
“This is the [bank] management’s way of alleviating pressure from the US and ensuring they can have some sort of calm internally,” she told Climate Home News.
Thwaites said shareholder countries should hold the bank’s leadership accountable for delivering what countries have “agreed and need” on climate action.
“If World Bank climate finance does start to fall, donors should focus their support on other international financial institutions that continue to prioritise climate,” he added.
Regional development banks outside of the Americas may be under less pressure to water down their climate mission. But the World Bank’s sister institution – the International Monetary Fund (IMF) – has seen its enthusiasm for climate action ebb, according to a report released in June by its official watchdog, the Independent Evaluation Office.
The report said that in 2021, the fund placed great emphasis on tackling climate change, as shown by its flagship climate strategy published that year and the establishment of the Resilience and Security Trust in 2022.
But in the last year or so, it found “decreasing emphasis on climate-related issues” which coincided with IMF cost-cutting, “emerging geopolitical challenges” and reduced support for climate action from some unnamed IMF member countries.
Last year, US finance minister Bessent accused the IMF of “mission creep”, accusing it of spending too much time on climate action, gender and social issues.
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The evaluation report found that the focus on climate change among the IMF’s management and executive board has weakened, and its flagship reports have not included any climate-related chapters since 2023. IMF head Kristalina Georgieva and other managers mentioned climate-related terms in speeches and statements to the board far less in 2025 than the preceding years, it noted.
While most of the nearly 700 IMF’s staff surveyed welcomed the swing away from climate work, others bemoaned it and felt “self censored” when working to promote awareness of the risks of climate change to the global economy – which the IMF is tasked with protecting.
TAGS:Climate finance, IMF, World Bank
