There is no cause for celebration, as the impacts of the climate crisis rise, so too does fossil fuels consumption reaching new records. One year on from their commitment to Paris Alignment, many Multilateral Development Banks (MDBs) are still peddling fossil fuels. Since the signing of the Paris Agreement, MDBs have collectively poured $17bn directly into fossil fuels.
Last year, Ajay Banga, President of the largest of the MDBs - the World Bank, had stated that he wants to see a ‘better bank’ before a ‘bigger bank’. The World Bank also changed its mission statement to focus on eliminating poverty "on a livable planet" – embedding the need for climate action strongly in the Bank’s mission. However, in 2023 alone the World Bank funnelled $194mn directly into fossil fuels.
The European Investment Bank is the only MDB to have a robust fossil fuel exclusion policy and can therefore be considered as Paris aligned. However, no other MDB currently meets the Paris alignment criterion.
Climate impacts are being felt more harshly than ever before, with at least 1300 people losing their lives during the Hajj ritual earlier this month due to extreme heat, record breaking temperatures being experienced in India, and extreme rainfall is also occurring leading to destructive floods in Kenya, Tanzania and other parts of East Africa. The World Bank and other MDBs’ ability to deliver on their commitment to eliminate fossil fuels will come under increased scrutiny as these impacts around the developing world intensify.
The Big Shift Global Coalition published an open letter to President Banga and the Shareholders of the World Bank calling for increased ambition to ensure the Bank aligns with the Paris Agreement. During a webinar also held by the Coalition, participants stressed on the need for the MDBs to aid developing countries to leap-frog over fossil fuels and roll out sustainable renewable energy.
Agnes Drimmel, Advisor to the Executive Director - EDS10 Constituency said, “We think the Bank’s Paris Alignment should be strong and credible, be a sense of minimum standards. We hear the concerns that there is room for improvement, on clear language and more transparency, but it is a big undertaking across a big institution and we see progress. We have to start somewhere and to continue with ambition… It will not be perfect from the start but we strive to be better and have more rigorous standards moving forward.”
Marjorie Pamintuan, Finance Campaigner, from Recourse said, “The launch of the World Bank’s new guarantee platform under MIGA coincides with the anniversary of the Paris Alignment. Both similar in methodology, the overhaul of the Bank’s guarantee business is envisioned to help address climate change by attracting more private investors thanks to a simpler, more accessible and faster process for issuing guarantees. The Bank’s political risk guarantees under MIGA however have historically enabled more fossil energy investments than non-fossil since the agency was created in 1988. As long as the loopholes for fossil gas remain, the Bank’s Paris Alignment, a “bigger” and “faster” MIGA, and even the Wold Bank itself, will not be able to shake off its fossil fuel legacy.”
Jon Sward, Environmental Project Manager from the Bretton Woods Project said, “Unlike some of its MDB peers, the World Bank failed to hold a public consultation before its Paris alignment approach was launched – and key concerns about how staff will determine what is ‘Paris-aligned’ remain. The Bank must live up to its promise to keep improving its approach. As a first step, this requires more transparency about how the Bank is judging projects and policy conditions to be aligned with the Paris Agreement’s 1.5C temperature goal. Alongside this, more detailed public disclosure of the World Bank’s climate finance accounting is needed, so that the figures it reports can be independently verified.”
Notes to editors:
- The Big Shift Global Campaign is calling on all of the world's biggest public development banks to shift finance out of dirty fossil fuels and into sustainable, renewable energy to provide energy access for all. For more info visit: www.bigshiftglobal.org
- Big Shift Global letter published in the Financial Times 1 Nov 2023
- Big Shift Global ‘Fossil Files’ video on the impacts of World Bank fossil fuel investments in Argentina, Indonesia and Egypt
Contacts:
General media enquiries
Sophie Richmond, Global Lead - Big Shift Campaign, srichmond@climatenetwork.org
Dara Snead, Communications Officer - dsnead@climatenetwork.org / +447917 583349 (WhatsApp/Signal)
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