World Bank criticized over spending climate crisis | Climate crisis

The World Bank has come under fire for failing to prove its alleged spending on the climate crisis is real, in a report suggesting that up to 40% of its reported climate-related spending is impossible to explain.

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

The findings are the final blow to the World Bank for its climate finance activities. Last month, former US Vice President Al Gore led calls for the bank’s president, David Malpass, to resign after he avoided a journalist’s questions about climate science.

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Malpass later apologized, but his apparent climate denial followed years of concern among governments and NGOs about his leadership of the bank and the bank’s continued financing of fossil fuels. Malpass was appointed in 2019 by then-US President Donald Trump, under the convention whereby the head of the bank is elected by the US.

Oxfam examined 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 lenders, 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, intended to help them reduce greenhouse gas emissions or adapt to the effects of the climate crisis.

The Oxfam report’s authors used the World Bank’s published information about its climate finance efforts and then applied the bank’s suggested method to see if they could reproduce the claimed spending figure of $17.2 billion.

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

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 can be built to better withstand the effects of extreme weather. That is essential for countries adapting to the climate crisis, but is an “added benefit” rather than the main point of the project.

Nafkote Dabi, head of international climate policy at Oxfam, said: “We just can’t be sure of the true value [of climate finance provided by the bank]. Our concern is the worst-case scenario – that the bank could significantly overestimate 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 in the way we apply the methodology and only grant co-benefits for the proportion of funding in a given project that is directly related to climate action. We stand by our assessment of side benefits.”

The spokesperson also said the bank has increased its climate spending and provided $31.7 billion in project financing directly related to climate action for projects that went to the bank’s board in 2022.

The bank has also long held that much more of its spending is climate-related than formally appears, because alleviating poverty or boosting development can also have a beneficial effect on making countries more resilient to the effects of extreme weather.

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

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

Climate finance will be one of the biggest issues at the next UN climate conference, Cop27, in Egypt next month. Poor countries are not only concerned that rich countries have failed to provide the $100 billion a year in climate finance that has long been promised to flow to them from 2020, but that much of the money currently being to middle-income countries that are already easy to attract investment, and over 70% of that comes in the form of loans, which can drive poor countries further into debt.

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