Key facts
- The World Bank will no longer commit to allocating 45% of its annual lending to projects with climate co-benefits.
- US Treasury Secretary Scott Bessent advocated for the removal of the climate finance target, citing inefficiency.
- Bessent urged the bank to prioritize access to abundant, affordable energy for developing countries, including fossil fuels.
- The World Bank previously committed to cease financing upstream oil and gas projects from 2019.
- The 45% target was established in 2023 during the Biden administration.
- US President Donald Trump has opposed climate action and previously withdrew the US from the Paris Agreement.
The World Bank announced on June 29 that it will abandon its commitment to allocate 45% of its annual lending to projects with climate co-benefits. This decision follows advocacy from US Treasury Secretary Scott Bessent, who argued in April that the target "breeds inefficiency, distorts economic decision making, and moves the bank away from its core mission."
Bessent stated that the organization must prioritize "advancing developing country access to abundant, affordable, and reliable energy to support economic growth and poverty reduction," including fossil fuels like gas, oil, and coal, rather than restricting borrower choice. He also called for an increase in gas projects.
The World Bank had previously committed to stop financing upstream oil and gas projects from 2019, though it could consider natural gas investments in specific circumstances. The 45% target was established in 2023 during the administration of then-US president Joe Biden. Current US president Donald Trump, who has opposed climate action and withdrew the US from the Paris Agreement after returning to office in 2025, wields significant influence at the World Bank, holding approximately 16% of the voting power.
Despite dropping the specific 45% target, the World Bank stated it will continue to support clients in achieving their Nationally Determined Contributions (NDCs) and has extended its 2021-25 Climate Change Action Plan (CCAP). However, it has also dropped the plan's target of allocating 35% of finance to climate-related projects. The bank affirmed it will continue to track and report on net greenhouse gas emissions and beneficiaries with enhanced resilience to climate risks.