We would like to set the record straight, given the amount of incorrect and inaccurate understanding of how the World Bank Group measures smart development and how it is linked to climate change – including most recently a blog by the Center for Global Development (CGD).
Development is at the very core of the World Bank Group’s vision to end poverty on a livable planet. Today, 44% of the global population remains poor, with almost 700 million people living in extreme poverty on less than $3 per day, whether they live in low-income or middle-income countries. Our knowledge and finance are used to create jobs – the best way to drive a nail in the coffin of poverty – and to invest in the underlying infrastructure needed to support those jobs: energy, water, education and health, to name just a few. At the same time, many countries are working to grow their economies and lift people out of poverty while confronting rising temperatures and sea levels, more frequent floods and droughts, and increasingly severe storms. That’s why we need to recognize the individual realities countries face, respond to their demands, and ensure that the financing we provide is for smart development.
Using a methodology we share with nine other Multilateral Development Banks and that was put into operation starting in 2011, we consider our development projects to have climate “co-benefits” when they also contribute to either reducing greenhouse gas emissions or vulnerability to climate change impacts. These are first and foremost development projects, and their appraisal must demonstrate that they deliver worthwhile development benefits.
This is why the recent criticisms from the CGD blog are misguided. They fail to recognize that we do not finance projects that are justified only on the grounds of their global climate mitigation impacts: our projects must be justifiable based on development needs that are prioritized locally. Incorporating climate co-benefits is doing development the right way—smart, high quality, and fiscally responsible— which means building resilience into everything we do. That’s what our clients want, and it’s where we are focused.
The blog asks a few questions, such as:
On mitigation: why do we support mitigation in the poorest countries that contribute the least to global emissions? Because we finance impactful development projects that also happen to reduce emissions. Take, for example, the bus rapid transit system we financed in Dakar with $100 million in concessional financing: the project helps create a modern and efficient urban transit system and better connect people to jobs, while reducing emissions. Or a project to help rice farmers use more efficient practices: in the seven years since the project started in 2015, Mekong Delta farmers increased their earnings by 30% on average and also reduced methane emissions from their fields.
Or consider a project to promote clean cooking, like the Electricity Access Scale-Up Project in Uganda, which will deliver 353,000 clean cooking solutions benefiting 1.6 million people. This investment is intended to save lives, especially women and children, from indoor air pollution that kills almost 700,000 people in Sub-Saharan Africa every year.
These are not climate projects; they are development projects that positively impact jobs and people and are built on technologies that have low emissions, thus delivering climate mitigation co-benefits. We choose investments to better the lives of poor people in every country we work in, using the best technologies available, building a more livable planet as we go. Incidentally, according to CGD’s own analysis, we spend almost nine times more on mitigation in middle- and high-income countries than in low-income countries (approx. $32 billion compared to $3.6 billion) – so it is disingenuous to argue that we have a bias towards mitigation in low-income countries. We simply do not.
On adaptation: why isn’t all our adaptation finance directed to the poorest countries? Adaptation investments are simply smart development. This is making people, their assets, and their jobs and infrastructure less vulnerable and more resilient. As such they deliver more benefits per dollar invested, a key feature of good stewardship of public resources. Why invest in roads that will be washed away by the next flood if they can be engineered to be more resilient? Why not invest in mangroves to protect coastlines and improve coastal fisheries? Whether in low or middle-income countries, building resilience into our projects and building resilience and unleashing opportunity through our projects, is smart development and maximizes the returns on scarce finance.
At a time when international, public, and private resources are being stretched to cover a multiplicity of needs, we believe even more strongly in transparency around what we are investing our money in. And being accurate about those investments. Which is why the CGD blog’s misrepresentation of what we do, where we do it, and how much we do is utterly puzzling to us. It is unclear how CGD has constructed its sample, which significantly differs from our data. Their sample contains 925 projects, out of which 825 were climate-tagged. However, during FY23-24, only 676 IBRD/IDA projects were approved by our board, of which 96% had climate co-benefits. Furthermore, they mention prior analysis that looks at our projects since 2000, while we have been tracking and publicly reporting climate co-benefits only since 2011.
Contrary to what CGD claims, only one fifth of our climate finance comes from “small interventions,” defined as less than 10% in climate finance attribution. And when that is the case, it is based on a rigorous analysis of the content of the project: in an education project in Guyana, for example, climate resilience was factored into building designs, protecting students from excess heat or the impact of floods. Surely, it would be irresponsible to build in any other way. So, the CGD is not just misguided about the very definition of climate finance – the methodology underpinning its analysis also has gaping holes.
We are at an inflection point for development. We face the familiar challenges of poverty, fragility, conflict, rising debt, but also increasingly the need to enhance resiliency and build on the opportunities offered by greener and more efficient technologies. Climate co-benefits measure the extent to which we capture these positive opportunities to deliver more to people in low- and middle-income countries. We are continuously improving our methodologies and indicators to better measure our impact on people’s lives and our new Scorecard is an important step in that direction. Taking climate change and climate technologies into account is a feature of our commitment to cost-effective and impact-oriented development.
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