The World Bank and Its Potential to Combat Climate Change
Our generation has the right to demand that finance be used for projects that create global equity and prosperity, not climate disaster.
Beverly Harp and Asha Athman, Roosevelt @ George Mason University
Only two countries in the world are not signatories of the Paris Agreement, an historic pledge by the world’s nations to work to cut greenhouse gas emissions. It seems very likely that this week the U.S. will add its name next to Nicaragua and Syria, when President Trump makes good on a campaign threat to “cancel” our nation’s participation in the Agreement. This action would be another clear indicator that while elected officials claim to be putting “America First,” they are putting the future of our generation dead last.
While we reorganize to make our local, state, and federal governments adopt sound climate policies, we can’t lose sight of the important role international institutions play in safeguarding our future (or not). The World Bank, as one example, has the capital and influence to determine whether our generation will face widespread climate disaster, or come together to stop climate change in its tracks. What we heard recently from a senior World Bank official, however, gives us pause about the Bank’s commitment to this cause.
Two weeks ago, Julia Bucknall, the World Bank’s Director of Environment and Natural Resources, participated in a panel discussion on the World Bank’s contribution to the Paris Agreement target of keeping the increase in global average temperature below 1.5°C above pre-industrial levels. Representatives from environmental organizations in the Global South and the Bank Information Center (BIC) had just finished presenting an exposé on the World Bank’s financing of fossil fuel projects. “This isn’t what we agreed to,” Bucknall warned, when she saw the title of BIC’s presentation on the World Bank’s “hidden carbon footprint.”
The panel was part of the World Bank and International Monetary Fund’s joint spring meetings in D.C. from April 17–23rd. We attended with members of our Roosevelt chapter at George Mason University, in partnership with SustainUS, a youth-led advocacy organization. Our goal was to learn about the World Bank Group’s work on climate change and to advocate for green, fossil-free finance. Though the World Bank Group exists to connect developing countries with finance they would otherwise be unable to access, its current portfolio includes lucrative fossil fuel projects and limited finance targeted at those living in energy poverty, for whom finance is most difficult to access. All week we saw this contradiction play out in meetings and conversations similar to the one above. We were surprised and frustrated by how much resistance there was to addressing an issue that The World Bank’s own president, Jim Yong Kim, recognizes as a “fundamental threat to development” with the potential to push 100 million people into poverty by 2030.
When it comes to the World Bank, the recognition and rhetoric on climate change are there, but the willingness to ban fossil fuel finance and restructure the Bank to meet these needs is not.
The Bank has concrete policy commitments to minimize the environmental impact of its energy portfolio and to help countries mobilize energy solutions that reduce poverty sustainably. Throughout the week, we heard consistent support for green energy and inclusive development from Bank officials. At the same time, the World Bank has also stated its intentions to “scale up” assistance for natural gas development. It has failed to outright ban investment in coal, instead leaving a loophole for “rare circumstances.” Oil Change International found that from 2011 to 2015, the World Bank’s fossil fuel exploration related financing totaled over $1.7 billion. That figure is alarming, especially since we are aware that at least three quarters of already-known fossil fuel reserves must remain untouched to limit warming to below 2°C, let alone 1.5°C. A report released by the Sierra Club and Oil Change International in 2016 found that only 10 percent of the Bank’s energy portfolio is specifically targeted at increased energy access for the poor. This might be an understandable decision for a private bank, but the World Bank is a public institution with the explicit mission to alleviate poverty.
At every chance we got, our delegation raised our hands to question this contradiction. We heard that the World Bank Group was not “designed” to finance smaller scale, distributed renewable projects. Bucknall later said that the World Bank Group is an organization that internally makes “evolutionary rather than revolutionary changes,” even in the face of climate change. All week long, statements of urgency and excitement about the potential of renewables were followed with caveats on the limitations of the Bank.
We reject these responses. The World Bank has massive potential to combat climate change, but it will require significant structural changes, and a ban on fossil fuel investments. If the World Bank is serious about its mission to end poverty, it has no other choice. The Bank must aggressively champion decentralized finance structures that are capable of funding smaller, locally owned projects in distributed renewables. They have the money that is needed, and success stories to model, as well as thousands of partners in governance and civil society that are ready to help them do so.
These revolutionary changes will not happen in a vacuum. The World Bank is a public institution that receives money from U.S. taxpayers, and we must hold them accountable to solve, not cause, climate change. As the Trump Administration contemplates a reckless course by withdrawing from the Paris Agreement, our movement more than ever needs to fight on all fronts to secure our future. That means prioritizing efforts to hold groups like the World Bank accountable. Our generation has the right to demand that finance be used for projects that create global equity and prosperity, not climate disaster. After all, we will be the ones left to clean up the World Bank’s fossil-fueled mess.