Spending

World Bank criticized for spending on climate crisis | Climate crisis

The World Bank has come under fire for failing to show that its reported spending on the climate crisis is real, with a report suggesting that up to 40% of its reported climate spending is impossible to justify.

Of the $17.2 billion the World Bank said it spent on climate finance in 2020, up to $7 billion cannot be independently verified, according to research by Oxfam.

The findings are the latest blow to the World Bank over its climate finance activities. Last month, former US vice president Al Gore issued calls for the resignation of bank chairman David Malpass after he dodged a reporter’s questions about climate science.

Climate journalism, open to all

Malpass later apologized, but his apparent climate denial followed years of concern among governments and NGOs over his leadership of the bank and the bank’s continued funding for fossil fuels. Malpass was appointed in 2019 by then-US President Donald Trump under the convention that the head of the bank is chosen by the United States.

Oxfam has reviewed the $21.3 billion in climate finance the bank reported in 2020, of which $17.2 billion was provided by the bank’s two main lending arms, the International Development Association and the International Bank for Reconstruction and Development.

Climate finance is money provided to developing countries in the form of grants and loans, to help them reduce greenhouse gas emissions or adapt to the impacts of the climate crisis.

The authors of Oxfam’s report took information published by the World Bank on its climate finance efforts and then applied the bank’s stated methodology to see if it could replicate the reported $17.2 billion spending figure. .

In a report on Monday, Oxfam found that the bank’s figures could be up to 40% off on either side of $17 billion. Oxfam said the bank could also be spending more than it claims, but the difficulty of accounting for money spent on climate-related activities meant it was impossible to tell.

Part of the problem with accounting for the bank’s climate finance activities is that many projects have a climate-related component, without being primarily climate-focused. For example, if a school or hospital is under construction, it could be constructed in such a way as to make it more resistant to the impact of extreme weather conditions. This is essential for countries adapting to the climate crisis, but it is a “co-benefit” rather than the main point of the project.

Nafkote Dabi, head of international climate policy at Oxfam, said: “We simply cannot be sure of the real value [of climate finance provided by the bank]. Our concern is the worst case scenario – that the bank significantly overestimates its contribution. »

The World Bank refuted Oxfam’s claims. A spokesperson told the Guardian: ‘Our co-benefits are calculated using the joint MDB [multilateral development bank] methodology. We are rigorous about how we apply the methodology and only assign co-benefits for the portion of funding in a given project that is directly related to climate action. We maintain our assessment of co-benefits.

The spokesperson also said the bank had increased its climate spending, providing $31.7 billion in project financing directly related to climate action for projects that were submitted to the bank’s board in 2022.

The bank has also long argued that far more of its spending is climate-related than formally appears, as reducing poverty or promoting development can also have a beneficial impact on countries’ resilience to climate impacts. extreme weather conditions.

However, Oxfam said the bank’s accounting methods could be made much more transparent. Dabi said: “This audit exposes the danger that some climate finance requests may simply be greenwashing.”

The World Bank faces a series of heated annual meetings later this month, in which it will come under pressure to show how it is helping developing countries recover from the Covid-19 pandemic and the global crisis. Cost of life. Malpass’s future as president is uncertain: The Guardian understands that some countries behind the scenes are looking for ways to oust the Trump appointee.

Climate finance will be one of the biggest issues at the upcoming UN climate conference, Cop27 in Egypt next month. Poor countries not only fear that rich countries have failed to deliver the $100 billion a year in climate finance they have long been promised from 2020, but that much of the money currently provided goes to middle-income countries that already find it easy to attract investment, and more than 70% of this takes the form of loans, which can add to the indebtedness of poor countries.