Multilateral Development Banks Absent from Glasgow Pact to Shift Fossil Finance to Renewables Signed by Major Shareholder Governments
Last week at COP26, almost 40 countries and institutions, including the United States, Canada, Germany, UK, France, Spain, Mali, Sri Lanka, Zambia, and Costa Rica, launched a joint statement committing to end direct international public finance for unabated coal, oil, and gas by the end of 2022 and to prioritize clean energy finance.
New calculations by members of the Big Shift Global coalition show 39 signatory countries and institutions that signed on to the statement make up a majority of multiple MDBs’ shareholders. The high level of participation from MDB donor and client shareholder governments alike means MDBs may soon be forced to end their fossil fuel finance. The Big Shift Global Coalition is calling on MDBs to take leadership and sign on to the joint agreement as well.
Big Shift Global Reaction to Multilateral Development Bank Joint Paris Alignment Statement at COP26
Yesterday afternoon the ten major multilateral development banks (MDBs) published their COP26 statement updating progress towards their joint commitment to Paris Alignment. Though the group of banks first committed in 2017 to a process to align their financial flows with a 1.5°C pathway and later pledged to complete this by 2020, yesterday’s statement provided few new details, posed no limits on fossil fuel support, and left timelines unclear.
Civil society expectations on Paris alignment for MDBs at COP26
As publicly-funded development banks, MDBs should become agents of transformative change, pushing for a green, just and resilient development model. For that, they need to scale up financing for sustainable, green development, help countries in pursuing equitable, low-carbon transitions, and end all support for fossil fuels.
In 2017, the MDBs committed to align all their operations with the provisions of the Paris Agreement. To that end, the MDBs started the Joint Paris Alignment Process and set up a working group to develop joint methodologies. However, four years later, the MDBs have yet to disclose comprehensive details of their methodologies. Meanwhile, they continue to invest in non-aligned projects, such as fossil fuels and associated infrastructure.
Members of the Big Shift Global coalition sent an open letter to the Heads of the MDBs and the members of the working group on Paris alignment ahead of COP26 outlining four demands for the MDBs to implement meaningful Paris Alignment, covering 1) Substance of Paris Alignment, 2) Extending Paris alignment beyond project finance, 3) Timeline for consultation and implementation, and 4) Reporting and transparency.
World Bank drives billions into fossil fuels, including Asia’s largest coal field
A new report by Big Shift member, Urgewald released this week tells the story of how the World Bank’s public assistance is behind the on-going development of Asia’s largest coal field – Pakistan’s Thar coal field and associated new coal power plants. The report shows that despite the World Bank’s pledge in 2013 to no longer finance coal power plants, the Bank still provides public assistance to coal in many crucial ways.
Pakistan is not an isolated case. Since the Paris Climate Agreement, the World Bank has provided $12 billion in fossil fuel project finance in over 35 countries and policy reforms in dozens of countries making fossil fuel investments more profitable. Given the billions of dollars in investments the World Bank is driving into fossil fuels, over 70 civil society organizations sent a letter to the World Bank’s Executive Directors calling for the replacement of the Bank’s president, David Malpas.
Civil society organisations react to World Bank Climate Change Action Plan’s failure to end finance for fossil fuels
Today, the World Bank Group released its new Climate Change Action Plan (CCAP) for 2021-2025. The CCAP represents a colossal failure to end the Bank’s long-standing support for fossil fuels.
The Bank has also rejected requests from civil society and World Bank shareholders for a public consultation on a full draft of the plan. The World Bank’s press release notes the Bank, “will regularly update its Board on the implementation of the Action Plan,” without providing further details of what aspects of the plan it will report on.
In March, 153 organizations and academics across six continents called on the World Bank Group President David Malpass and WBG leadership to immediately adopt a whole-of-institution commitment to end all types of direct and indirect support for fossil fuels, including gas.
The CCAP falls well short of this, as it includes no concrete new restrictions on World Bank finance for fossil fuels. While the World Bank CCAP states that new gas investments will be “assessed for consistency” with countries’ national climate plans, it provides no details of the screening process the Bank will adopt going forward.
This lack of detail is a concern, given the Bank’s considerable recent support for fossil fuels. According to a new report from the International Institute for Sustainable Development (IISD), the Bank provided 12 percent of G20 and MDB public finance for fossil gas projects in developing countries between 2017-19. World Bank Group finance for fossil fuel projects has totaled more than $12 billion in over 30 countries since the Paris Agreement.
In response to the release of CCAP, civil society representatives made the following statements:
“The World Bank Group’s selective approach to phasing out fossil fuels is about as effective as throwing both water and gasoline at a house fire. With far-away Paris alignment dates, this Plan fails on both science and justice metrics. The Climate Change Action Plan allows the WBG to continue to expose the countries and communities it's mandated to support to the risks and harms of fossil fuel development, including increasingly expensive and volatile energy prices, lock-in of obsolete infrastructure, stranded assets, illness, displacement, and a delayed and unjust transition,” said Luisa Galvao, International Policy Campaigner, Friends of the Earth US.
“Recourse has repeatedly exposed IFC's links to fossil fuel projects via financial intermediaries - including coal, oil and gas. Refusing to detail a timeline and targets for cleaning up its FI portfolio - which comprises over half of IFC's business - is simply inexcusable. Time is running out for meaningful climate action, and IFC needs to lead rather than wait for collective action," said Kate Geary, Co-Director of campaign group Recourse.
“The gender-blind CCAP belies the Bank’s decades-long claim that it “mainstreams” gender dimensions into all activities, including CCAP’s poverty, biodiversity, energy, agriculture, cities, transport and manufacturing priorities. CCAP fails to recognize that while the climate crisis harms all people, not everybody is affected equally. Marginalized gender groups, especially women and LGBTQ people, are disproportionately impacted. With 79% of women reporting their livelihoods depend on agriculture and natural resources as does their unpaid care work collecting household water and fuel, climate catastrophes often fall most heavily on women,” said Elaine Zuckerman, of Gender Action.
“The World Bank has to stop pushing policy reforms that make fossil fuels profitable. The World Bank’s policy reforms, including tax breaks and higher energy tariffs, are driving fossil fuel investments across the globe. CCAP is not a meaningful plan to address climate change if it doesn’t address fossil fuel investment incentives within the Bank’s policy-based lending” said Heike Mainhardt, Senior Advisor, Urgewald. “Furthermore, the CCAP’s central climate commitment to boost “climate finance” to an average 35% of World Bank Group’s finance is a bogus climate commitment. The Bank is not transparent about what counts as “climate finance” and intends to partially fulfill this pledge with non-earmarked budget support provided through policy-based lending. The non-earmarked budget support does not have to be spent on any specific climate expenditure and because the Bank refuses to put fossil fuels on the Excluded Expenditures list, this funding can be spent on any fossil fuel expenditure, including coal.”
“The World Bank Group first pledged to align its finance with the Paris Agreement in 2017, and in 2021 we’re still waiting. The new CCAP leaves the door open for continued large scale gas support with very unclear language on how it will be screened. It adds nothing on how they will end the Bank’s influential and hard-to-track support for oil, gas, and coal via development policy finance, associated facilities, and financial intermediaries. This public money is urgently needed to support a fair green recovery and a just transition from fossil fuels for workers and communities instead.” said Bronwen Tucker, Research Analyst, Oil Change International.
“The World Bank’s new Climate Change Action Plan identifies key sectors that require urgent transformation to avert catastrophic climate change, but falls well short of committing to a bold new World Bank agenda that would help to deliver this transformation. In the energy sector, the Bank must develop a robust approach to phasing out its support for fossil fuels, starting with rapidly scaling back its investments in fossil gas, across all aspects of its lending portfolio. The plan’s reliance on ‘crowding in’ private sector investors also risks deepening inequality within and between countries as the climate crisis unfolds, particularly without consultative and transparent decision-making processes being baked into these efforts. As noted by prominent economist Daniela Gabor, this approach relies on de-risking green investments to maximise the returns for the same institutional investors who are systematically financing the climate crisis,” said Jon Sward, Environment Project Manager, Bretton Woods Project (UK).
“The CCAP reiterates the Bank’s commitment to achieve an average of 35% of direct climate finance for its entire portfolio. This is just 3% more than the 32% that was already achieved in 2018. However, more concerning is that even though the CCAP explains its desire to expand their definition of climate finance, it does not recognize nor commits to more transparency of its climate finance reporting at the project and activity level to ensure that limited resources are being effectively used and accounted for. So far, it’s practically impossible to have full confidence in the Bank’s numbers. Despite our best efforts, Oxfam has found it impossible to verify the levels of climate finance the Bank has reported so far at the project level with the information currently disclosed,” said Christian Donaldson, Senior Policy Advisor, Oxfam.
Jon Sward, Bretton Woods Project: jsward[at]brettonwoodsproject.org
Heike Mainhardt, urgewald: heike.mainhardt[at]urgewald.org
Bronwen Tucker, Oil Change International: bronwen[at]priceofoil.org
Kate Geary, Recourse: kate[at]re-course.org
Jacey Bingler, Urgewald: jacey[at]urgewald.org
153 Organizations and Academics Call on World Bank to End Finance for Fossil Fuels
In a letter sent today, 153 organizations and academics across six continents called on the World Bank Group President David Malpass and WBG leadership to immediately adopt a whole-of-institution commitment to end all types of support for fossil fuels, including gas. The letter comes as the WBG prepares to publish its new Climate Change Action Plan.
WBG finance for overseas fossil fuel projects has totaled more than $12 billion since the Paris Agreement. The letter argues this finance is incompatible with the WBG’s climate commitments, and must instead be replaced with dramatically increased support for renewable energy, distributed energy access, creation of new household electricity connections, and support for a ‘just transition’ for workers, communities, and national utilities.
The WBG is facing renewed pressure to end its oil, gas, and coal support following a letter from nine of its own Executive Directors and growing momentum from key economies to phase out their own international fossil fuel finance. The UK, EU, and US have all made commitments to this effect in the past four months, with explicit commitments to pursue diplomacy to encourage others to do the same.
Blog 16.02.21: Biden announces new climate change policy; will the World Bank follow by ending their fossil fuel financing?
Recently elected US President Joe Biden has promised action to combat climate change. On the first day of his presidency, he announced, ‘we’ve already waited too long to deal with this climate crisis’. Since then, Biden signed executive actions for climate change and re-joined the Paris climate accord. We, from the Big Shift Global campaign, are excited to see the next steps. Alex Doukas, the Stop Funding Fossils Program Director at Oil Change International said: “Not only has President Biden instructed federal agencies to identify and remove domestic fossil fuel subsidies wherever they are able to, he has also instructed the relevant departments and agencies to use the diplomatic weight of the United States to end international public finance for fossil fuels as well.”
The question remains whether other global institutions, largely influenced by the US, such as the World Bank will follow Biden’s ambitions. The US seeks to double renewable energy production from wind by 2030. Will the World Bank also double-down on their climate policies? We are waiting to see whether the US representatives’ actions will reflect Biden’s values.
Blog 09.12.20 Five years of the Paris Agreement – time for the MDBs to increase action
Five years ago, negotiators were celebrating the adoption of the Paris Agreement. An agreement to unite global efforts to limit global warming to 1.5°C. Today, the fight for these global efforts continues as we witness the impact of climate change on frontline communities and the importance of fighting for climate justice for those who have contributed least to this crisis but who are suffering some of the worst impacts.
CAN International, member of the Big Shift Global, is running a #WorldWeWant campaign which centres around people and climate impacts. The campaign highlights the need for deep and urgent action to ensure the Paris Agreement is realised and warming is kept to below 1.5°C. This campaign includes the demands of the Big Shift Global that there must be a shift in financial flows out of fossil fuels into sustainable, renewable energy access for all.
Finance in Common: A missed opportunity for leadership and ambition on climate and energy
The Finance in Common Summit brought together over 420 public development banks (PDBs) including the multilateral development banks (MDBs) as well as regional and national development banks. Given the PDBs’ mandate for environmentally sustainable development, collaboration between these banks should have had the potential to catalyse investments and build momentum towards the achievement of the SDGs and the climate and biodiversity goals.
The summit declaration which sought to build collaboration towards the achievement of these goals lacked concrete, timebound commitments to ending finance to coal and to aligning with the Paris Agreement. Disappointingly, despite the MDBs commitment to align their finance with the Paris Agreement 5 years ago, the Asian Development Bank, Asian Infrastructure Investment Bank, World Bank Group, New Development Bank and InterAmerican Development Bank did not join the official list of signatories at Finance in Common, but only “witnessed” it.
Blog 5.11.20 Finance in Common – An opportunity for bold climate action
The Finance in Common Summit, next week, will be the first ever meeting of all 450 public development banks including the Multilateral Development Banks as well as regional and national development banks from across the globe. The summit takes place on the 11th and 12th November and is organised by the AFD (French Development Agency), with the backing of President Macron and UN Secretary General Gutteres.
The public development banks together spend USD$ 2 trillion per year – representing 10% of all investments in the world annually - so how they spend public money is hugely important. With vast amounts of public money being spent as a result of the COVID-19 crisis, decisions made now and at the summit about how to use these funds will have long-term consequences. Decisions, therefore, must include the acceleration of a sustainable and fair recovery that simultaneously tackle the climate and economic and social crises.
Now is the time for the MDBs to announce how they will put their commitment to the Paris Agreement into practice specifically by stopping all fossil fuel funding and investing in renewable energy access for all.
Blog 26.10.20 World Bank Annual meetings - Bolder Action Needed.
The World Bank Annual meetings which took place virtually last week, saw calls from Big Shift Coalition members and many others for the bank to green its COVID-19 response, to stop funding fossil fuels and contribute to building the world we want.
Read on for an overview of Big Shift actions around the meetings and an overview of some of the outcomes.
Blog 19.10.20 Off target: World Bank’s fossil fuel addiction keeps energy poor countries in the dark
Nezir Sinani of Recourse (a member of the Big Shift Global campaign) writes about how the World Bank continues to prioritise fossil fuels and how it is failing to bring people out of fuel poverty in countries where Recourse and other Big Shift members have carried out research.
Poverty reduction, energy access goals and climate goals are inextricably linked and require urgent and bold action. Given the World Bank Group’s (WBG) mandate to eradicate extreme poverty, it is important to assess how the development institution approaches energy access and climate goals and whether it is taking the urgent actions needed to address both.
Blog 12.10.20 World Bank Annual Meetings - Investments in fossil fuels are not acceptable
The Big Shift campaign is urging the World Bank to take bold decisions during its 2020 Annual Meetings to ensure the spending of public money as part of the COVID recovery is not making the climate crisis worse but ensuring a green, sustainable just recovery for all. The choices made now will have an impact for years to come.
Blog 08.10.20 The EBRD has announced its new president – Congratulations to Odette Renaud-Basso!
Congratulations to Odette Renaud-Basso as the new president of the European Bank for Reconstruction and Development (EBRD) and the first woman to hold the permanent presidency of a major multilateral development bank.
With the start of this new presidency, members of the Big Shift Global Coalition have high expectations for the EBRD to become a truly green bank.
Blog 17.09.20 Who will be the next president of the EBRD? (And why Big Shift Global members care)
The decision about who will be the next candidate of the EBRD is due in October.
Whoever becomes president of the EBRD must lead the bank quickly and decisively to act on climate change and energy access for all.
There are three candidates in the running for the Presidency of the EBRD: Odile Renaud-Basso of France, Pier Carlo Padoan of Italy and Tadeusz Kościński of Poland. We want to hear from the candidates about how they will lead the bank on climate and energy access.
2 month countdown to Finance in Common summit
September marks two months until the Finance in Common Summit - the first ever meeting of all 450 public development banks. Development banks that hold $11.2 trillion in public assets. With huge amounts of public money being spent as a result of the COVID-19 crisis, decisions made now, including during the summit, about how to use these funds must include the acceleration of a sustainable, just recovery.
Blog 21.08.20: Climate Change Commitments and World Bank Group investments in Argentina: Are investments aligned with Climate change commitments?
The World Bank Group (WBG) recognizes climate change as a threat to global development that increases instability and contributes to poverty, fragility, and migration. In response to this challenge, in 2016 the WBG launched the Climate Change Action Plan (CCAP), which established general objectives for 2020 to create policies that strengthen resilience to the impacts of the climate change and the promote decarbonization, while alleviating poverty.
After analyzing the commitments made in the CCAP and the Bank’s investments in Argentina, and considering the active projects (although some date from prior to the CCAP), we observed that the value of direct investments destined for fossil fuels was 88 percent higher than for renewable energies, totaling US$ 541 million in investments in fossils, while only US$287 million went to renewable energies.
African CSOs call for ambitious targets and increased investment in energy access by the World Bank Group
African CSOs, led by Big Shift Global member, ACSEA have sent a letter to the World Bank welcoming the Banks's new LEAP energy proposal but calling for more ambitious targets, increased investment in energy access and greater consultation with those it will impact.
The letter sent to World Bank directors highlights that in order to also address COVID19 recovery the LEAP energy proposal must address energy access for the 1 in 2 people without electricity and the 890 million people without clean cooking in Africa. Increased energy access is vital to reduce the health impacts of air pollution from polluting fuels, as well as promoting renewable energy to generate jobs and secure livelihoods in the recovery from the crisis.
The letter calls for increased investment in sustainable renewable energy including off-grid and mini-grid renewable energy and the need to accelerate progress on clean cooking. It also states that the strategy must have stakeholder buy in and that people impacted by energy projects and African civil society who understand the needs of energy consumers must be consulted.
Blog 24.06.20 The World Bank is Failing Nigeria on Climate Goals and Energy Access
Anna Östergren of SSNC and Nezir Sinani of Recourse have published a blog summarising the findings of their latest report, written with ACSEA, on the World Bank's energy and climate performance in Nigeria.
In Nigeria, 24 percent of the population or about 41 million people live in areas of high climate risks from storm surges, coastal and inland flooding, wildfires and drought. A rapid transformation of the energy sector, from fossil fuels to renewable energy, is needed to combat climate change and also to increase energy access. Despite Nigeria’s vast potential for renewable energy,the WBG prioritises fossil fuels over renewable energy.
The MDBs and a Just, Paris-aligned Recovery - If you missed the Big Shift webinar catch up here!
A Paris-aligned and just recovery to Covid-19 by the Multilateral Development Banks (MDBs) is a vital part of the global response. On 28th May, members of the Big Shift Global Coalition organised a webinar to discuss this further with 4 panellists: Bronwen Tucker, OCI; Dileimy Orozco, E3G; Augustine Njamnshi, ACSEA and Andrew Scott, ODI, moderated by Vibeka Mair of Responsible Investor.
Panellists presented views on: MDBs’ track records in energy financing; recovery packages so far; what a Paris-aligned, just recovery should look like; why this should not include investment in oil and gas and specifically what this should look like in the case of Africa.
Africa Day 2020 - An open letter calling on the AfDB to stop funding fossil fuels
Africa Day is on 25 May. Big Shift Global member, the African Climate Reality Project has a tradition of using this day to amplify the call for a fossil free, low-carbon, and climate resilient future for the continent.
They have published an open letter calling on the African Development Bank to stop funding fossil fuels and shift to 100% renewables.
U.S. Faith-Based Coalition Calls on World Bank to Take Climate Action in the Time of COVID
A coalition of faith-based organisations in the United States have launched a campaign in support of Big Shift, calling on the World Bank to end all support for fossil fuels and shift investment to renewable energy access in the time of COVID-19 and beyond.
Blog 13.05.20 - COVID-19 Recovery and Renewable Energy in Africa
Eugene N Nforngwa, Thematic Lead for Just Transition and Energy Access at the Pan-African Climate and Environmental Justice Alliance (PACJA) and Programmes Advisor at the Africa Coalition for Sustainable Energy and Access (ACSEA) presents why renewable energy and just recovery are vital in the Covid-19 recovery planning process in Africa
Blog 17.04.2020 - A Time to Change
Andrew Schwartz, Deputy Director at Center for Earth Ethics outlines how the response to the coronavirus crisis must increase resilience and minimise climate change by shifting funding from fossil fuels to renewable energy.
World Bank Directors urged to intervene in Guyana’s oil development over conflict of interest
Shortly before the World Bank holds its digital Spring Meeting, the NGO Urgewald and partner civil society organizations have sent a letter to Executive Directors to express concerns with the bank’s involvement in Guyana’s oil & gas development.
Blog: 14.04.2020 - Multilateral Development Banks must implement a sustainable recovery from Covid-19
The global response to the coronavirus crisis continues to gather pace and emergency responses supporting health services and economies are vital at this stage for many across the globe. Just like the Covid-19 crisis, the impacts of climate change will be felt more acutely by the poorest and most vulnerable people. It is vital that the stimulus packages supported by MDBs address this and respond to both crises.
MDBs fail to deliver on joint Paris Alignment promise at COP25
At COP25 in Madrid, Spain the nine multilateral development banks (MDBs) provided a public update on their joint commitment to Paris Alignment. Though the group of banks first committed to a process to align their financial flows with a 1.5°C pathway in 2017, yesterday's announcement provided few new details.
Big Shift coalition open letter to the leaders of the MDBs
As COP25 in Madrid begins, the Big Shift coalition calls on the Multilateral Development Banks to align their finance with the 2015 Paris Agreement, increase their investments in renewable energy and stop financing fossil fuels and ensure they present a detailed approach and report on their progress.
Civil Society Letter to World Bank group
Nearly 100 civil society organisations who are planning protests outside this year's World Bank Annual Meetings have written a letter to the World Bank President and Executive Directors calling for greater action on climate change.