World Bank Drops Climate Lending Target Shift

The World Bank Group has eliminated its target of allocating 45% of annual lending to projects with climate co-benefits, marking a significant shift in its Climate Change Action Plan (CCAP) framework. The institution said it will retire both the 45% and previously established 35% targets, moving instead toward a results-based model focused on development outcomes under its “development smart” approach.

“We will complete our shift from inputs to outcomes to maximize development impact. We will retire the 45-% climate co-benefits target and the 35% target in the Climate Change Action Plan,” said a World Bank Group statement.

Under the new model, projects will be assessed primarily on their ability to generate employment, economic growth, and social welfare, while climate benefits will remain integrated where relevant. The bank confirmed it will continue financing climate-related initiatives such as renewable energy, climate-resilient agriculture, and disaster adaptation projects, but without a binding allocation benchmark.

The decision comes amid sustained political pressure from the United States, the World Bank’s largest shareholder. In April, Scott Bessent, US Treasury Secretary, said the bank should drop its climate finance targets, arguing they “breeds inefficiency, distorts economic decision making, and moves the Bank away from its core mission.” President Donald Trump has also repeatedly criticized climate-focused multilateral policies, pushing institutions to prioritize economic growth and fossil fuel development.

Despite support from France and 18 other shareholder countries for maintaining a strong climate mandate, other major stakeholders including the United States, Russia, Kuwait, and Saudi Arabia did not support the framework, while India and Japan abstained, underscoring divisions in global climate governance.

In 2025, 48% of World Bank Group financing carried climate co-benefits, totaling approximately US$50.8 billion, according to official data. More than one-third of this funding was allocated to Africa, reflecting the institution’s focus on developing economies most exposed to climate risks.

The bank said its broader Climate Change Action Plan will continue without a fixed end date and that it will strengthen reporting on greenhouse gas emissions and project-level climate impacts. However, analysts and development observers warn that removing a quantifiable target could reduce transparency and complicate comparisons of climate finance commitments across years and institutions.

The shift raises questions about the future structure of global climate finance, particularly for developing countries that rely on multilateral lending to fund adaptation infrastructure, renewable energy systems, and resilience projects increasingly linked to food security, water availability, and economic stability.