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Of 2,047 projects categorized as “climate mitigation” by the World Bank, several hundred have no explanation as to how they reduce emissions
Washington, DC – The World Bank’s climate mitigation portfolio includes several hundred loans that appear to have nothing to do with climate mitigation, according to a new study released today by the Breakthrough Institute and the Center for Global Development.
Researchers examined 2,554 projects between 2000 and 2022 that the World Bank includes in its climate portfolio, including 2,047 projects tagged specifically as climate mitigation.
The researchers found that several hundred projects tagged as “climate mitigation”—many in poorer countries—appear to have little to do with climate change mitigation, and note that “a plain reading of project documents sheds no light on why they are labeled as climate change projects.” The study states that “this ambiguity in labeling is particularly problematic for climate mitigation, which ought to be linked directly to quantifiable emissions reduction.”
Many of the projects tagged as climate mitigation are related to health, education, and other sectors. Examples include loans for improving municipal transparency in Gaza, improving teaching at higher education institutions in Mexico, and increasing women and adolescent girls’ empowerment and their access to quality reproductive, child and maternal health services in Chad. Project documents offer no justification for these projects’ value in mitigating climate change nor information on how these loans reduce greenhouse gas emissions.
“Economic development is strongly associated with decreased vulnerability to climate. To the extent that more educated people are more climate-aware, might innovate more to reduce emissions, or cope better with climate-related events, an investment in education is indeed an investment in climate resilience. But this or any other explanation is completely missing from project documents” said Vijaya Ramachandran, director for energy and development at The Breakthrough Institute and an author of the study. “To improve its climate spending, the World Bank must have a better handle on its climate portfolio and also be able to accurately measure and demonstrate the effectiveness of projects aimed at addressing climate change. Right now that’s simply not happening.”
Key findings from a review of the World Bank’s climate portfolio include:
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Of the 2,554 World Bank projects tagged as “climate,” several hundred—on a plain reading of project documents—do not have an obvious connection to climate. For example, there are 188 public administration projects tagged with a climate label. Some projects are tagged at just 1 or 2 percent climate, and it is difficult to find a link to climate change. One example is the Payments Automation and Integration of Salaries in Afghanistan Project (P168266). Its objective is “to support the development of digital government-to-person payments in Afghanistan.”
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The World Bank's climate portfolio favors mitigation initiatives over adaptation initiatives, both in middle-income countries and in energy-poor, low-income countries. Of 2,554 total projects, 1,179 are focused solely on mitigation, 507 solely on adaptation, and 868 on both. The total amount of funding toward mitigation totals $68.7 billion while funding for adaptation totals $50.7 billion.
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Most projects tagged as climate mitigation lack estimates of GHG emissions reductions, and there is no standardized reporting on GHG estimates across the portfolio. A plain reading of documents for projects labeled greater than 75 percent climate in FY22 revealed that only six had such estimates. Other project documents mention emissions reductions but provide few details. As such, it is impossible to verify the Bank’s claim of emissions reductions of 194 tCO2 eq/year for FY19 to FY22.
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Currently, the World Bank’s climate portfolio does not target resources to ensure that mitigation financing is going where potential gains in emissions reduction are greatest. In turn, the portfolio fails to target adaptation financing where the needs are greatest. These project-level findings are consistent with analysis of official climate reporting, which also points to the lack of differentiation. Further, the lack of appropriate differentiation between low- and middle-income countries likely inhibits needed energy investments in very low-emitting. poor countries.
“When funding projects to address climate change, the World Bank shouldn’t sacrifice quality to keep up with the demand for quantity. Yes, scaling up climate finance is crucial, but it should not come at the expense of a strategic approach to programming climate finance,” said Scott Morris, a senior fellow at the Center for Global Development and author of the study. “Transparency, clarity, results, and a renewed focus on climate adaptation over mitigation should be at the forefront of the Bank's agenda.”
The researchers made a series of recommendations to improve the World Bank’s climate finance portfolio, including:
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Calling on the World Bank to provide high quality, transparent estimates of its impact on emissions
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For projects in education, health and other sectors that appear to have no relationship to climate mitigation or climate adaptation, but are tagged as climate projects, calling on the World Bank to explain its reasoning and to explicitly note which projects have direct and which have indirect effects on addressing climate change.
To read the full study, What Counts as Climate? Preliminary Evidence from the World Bank’s Climate Portfolio, visit https://www.cgdev.org/publication/what-counts-climate-preliminary-evidence-world-banks-climate-portfolio..
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