World Bank Retreats From Biden-Era Climate Target
Synopsis
The move signals a retreat from ambitious climate finance goals amid pressure from the Trump administration, raising questions about the future of global climate financing initiatives.
The World Bank has abandoned one of its most ambitious global climate goals, aiming for just 45% of its annual lending to be directed toward climate initiatives. In its place, it will be evaluating projects based on broader development outcomes and extending its Climate Change Action Plan.
The move is not an abdication of the bank's commitment to funding climate-related development work, but rather a different way of measuring such work.
Bank officials said that they will continue to finance projects aimed at boosting climate resilience, enhancing food security, increasing access to clean energy, and safeguarding infrastructure in instances that align with member countries' development priorities.
Policy Shift Changes How Lending Will Be Measured
The initial 45% lending target was put in place in 2023 after shareholders voted to push multilateral development banks for more funds to both cut emissions and adapt to climate change.
The World Bank is now doing away with that, and its prior 35% target for climate-related development work. Instead, the bank is shifting to a results-based approach that puts a higher premium on economic growth, poverty alleviation and climate resilience.
In a news release detailing the shift, World Bank President Ajay Banga described the move as a results-focused approach. No more quotas. In the release, the bank also noted that it will continue to publicly share its annual climate finance disclosure reports and its tally of climate-related investments in its portfolio.
Climate Finance Remains a Large Share of Lending
Even after the formal target was dropped, climate finance remains a substantial chunk of the bank's business. The World Bank FY2025 Climate-Related Disclosures Report found the institution made climate finance pledges totalling $39.2 billion in fiscal year 2025 through the IBRD and the IDA -48% of total lending and higher than its now defunct 45% climate finance target.
The report shows adaptation climate finance, which includes measures for climate resilience and disaster management like developing infrastructure resilient to natural disasters and providing support for agriculture, is currently nearly half of the bank's overall climate-related pledges, implying that many borrowing countries are continuing to demand and receive financial assistance for adaptation efforts-especially low- and middle-income countries facing growing risks from climate change.
The underlying drivers of change
The policy change arises as a result of significant disagreement between the bank's principal shareholders on where its future development goals should lie.
The United States, its largest contributor, wanted the bank to refocus on traditional banking objectives and economic development, while France and other European nations strongly advocated maintaining specific climate-financing targets.
The revised policy comes at a time of increased focus on climate-related investments. In 2024 alone, climate finance hit $2 trillion globally, with projections indicating an annual need for $7.8 trillion between 2025 and 2030. This means there is a substantial funding gap, a fact the World Bank is acknowledging.
The policy shift highlights the reorientation toward investments measured by economic and development outcomes, rather than predetermined climate finance amounts, and signals a move by the world's largest multinational development bank in how it will support businesses, governments, and investors worldwide-including those in Australia and the U.S.
Source: The West Australia
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Pooja Malik is a business journalist with over six years of experience covering startups, entrepreneurship, and emerging trends. She has previously worked with leading media platforms such as YourStory Media and BW BusinessWorld, where she reported on business, policy, and market developments. Currently, she serves as Editor at The Inspirepreneur Magazine, where she writes and edits stories across business, lifestyle, and travel, with a focus on clarity, accuracy, and reader relevance.
