Committee for the Abolition of Illegitimate Debt

According to the Bank’s press release, it will provide $133 billion in direct finance, and leverage Leverage This is the ratio between funds borrowed for investment and the personal funds or equity that backs them up. A company may have borrowed much more than its capitalized value, in which case it is said to be ’highly leveraged’. The more highly a company is leveraged, the higher the risk associated with lending to the company; but higher also are the possible profits that it may realise as compared with its own value. $67 billion in private sector investment as part of the $200 billion target.

In response, the Big Shift Global coalition released the following statement:

In putting substantial resources towards finance for climate action, the World Bank World Bank
WB The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

Group is signaling to the wider world that developing countries should receive far more support to both reduce their emissions and address the devastating impacts of climate change that threaten them, including increasingly extreme weather, sea level rise, and decreased food production.

this new statement is silent on the desperate need to radically scale up financing for distributed renewable energy

While the World Bank Group’s latest signal of commitment to climate action is encouraging, this new statement is silent on the desperate need to radically scale up financing for distributed renewable energy, especially to bring modern electricity to the poorest of the world’s people, to support the global community’s aim of achieving universal energy access by 2030 — a core element of the Sustainable Development Goals.

And the new statement is also silent on the World Bank Group’s remaining fossil fuel finance, which, if it persists, will continue to undermine efforts to fight climate change. A new approach to engaging with the financial institution partners of the World Bank Group’s private sector arm, the IFC, was announced in 2018, to limit coal finance — but this statement does not help clarify whether that approach will apply not only to coal, but also to oil and gas, despite the World Bank Group’s commitment to phase out their direct financing for upstream oil and gas activity last year.

the new statement is also silent on the World Bank Group’s remaining fossil fuel finance

Ben Niblett, Senior Campaigner, Tearfund said:

“The World Bank Group has stepped up its climate commitments and provided a boost to the urgently needed finance for the most vulnerable to adapt to devastating floods, storms and droughts. But millions of people are still living in the dark without clean, affordable energy. To avoid people being left behind and to boost economic growth, the World Bank must significantly scale up investments in off-grid renewable energy, like solar.”

Alex Doukas with Oil Change International said:

“The World Bank Group has promised to do more to help vulnerable countries fight climate change, and that should be applauded. But unless the Bank does more to reduce its direct and indirect support to the fossil fuel industry, its finance will continue to work at cross purposes and damage the climate. The Bank’s private sector arm, the International Finance Corporation, should clarify that its new proposed limits to indirect support for the coal industry will also apply to the heavily polluting oil and gas industry.”

Jon Sward of the Bretton Woods Project said:

“The Bank’s new commitments fall short of ensuring that its investment portfolio is in line with a 1.5ºC future. Civil society groups had called for the Bank to introduce an emissions target for its lending and operations as part of its post-2020 climate goals, but the new set of targets do not introduce any new restrictions on the Bank’s fossil fuel finance. Moreover, one-third of the Bank’s $200 billion climate finance commitment will come from leveraging the private sector. There’s a question of how relevant this approach is for low-income countries (LICs), where grant and loan-based finance will be needed to fund these countries’ climate transitions.”

Nezir Sinani with Bank Information Center Europe said:

“This increase in climate finance is meaningful only if the bank ends its support to coal and other fossil fuel investments. The World Bank Group continues to be exposed to coal and other fossil fuel investments due to weak policies and safeguards that apply to its indirect lending instruments, i.e. World Bank’s Development Policy Loans (DPL) and IFC’s Financial Intermediary (FI) investments. In order to avoid such exposure, the World Bank Group needs to introduce a climate safeguards that applies to its DPL investments, must disclose its exposure to coal and other fossil fuel projects in its IFC FI investments and end its collaboration with FI clients exposed to coal.”

Dr. Kat Kramer with Christian Aid said:

“While the World Bank’s additional finance can help to drive very low carbon and climate-resilient development, overall, today’s statement provides little sense of its anticipated overall climate impact. At its annual meeting in October, the Big Shift Global coalition had called upon the Bank to commit to transforming its entire investment portfolio to be consistent with limiting global warming to 1.5C above preindustrial levels, essential to avoid life-and death climate impacts, that affect the poorest the most. The world needs the Bank to repudiate the fossil era, and embrace the efficient and renewable enlightenment, as the only acceptable paradigm for energy investments.”

Media enquiries:

Alex Doukas (in Katowice), alex[at]priceofoil.org

Dr Kat Kramer (in Katowice), , Tel: +44 (0) 7763 557292

Jon Sward (in UK) jsward[at]brettonwoodsproject.org, Tel: +44 (0)2031220651 ext. 7651

Nezir Sinani (in Netherlands), nezir[at]bic-europe.org, Tel: +31 614820789

Gareth Russell, Tearfund media, with Ben Niblett as spokesperson (in UK) gareth[at]jerseyroad.co.uk, Tel: +44 (0)7967 468008

Notes:

As part of its post-2020 climate commitments, the World Bank also launched an Adaptation and Resilience Action Plan, which seeks to provide $50 billion in direct adaptation finance over 2021-2025, and to create a new ranking system to ‘track global progress on adaptation and resilience’.

The WBG will also support countries to implement their Nationally Determined Contributions to the Paris Agreement, and develop long-term strategies to climate change: ‘Together with the NDC Partnership, the WBG will support at least 20 countries to systematically implement and update their NDCs and support an increasing number of countries to develop integrated mid-century low carbon and climate resilient strategies’

The targets also seek to elevate climate action in key sectors, by ‘enabling infrastructure for 36 GW of renewable energy, and supporting 1.5 million GWh-equivalent of energy savings through efficiency improvement; in cities, helping 100 cities achieve low-carbon and resilient urban planning and transit-oriented development; and in food and land use, increasing integrated landscape management in up to 50 countries, covering up to 120 million hectares of forests.’

Source: https://bigshiftglobal.org/world-bank-news