The World Bank Group has announced it will retire its 45% climate finance target while extending its Climate Change Action Plan (CCAP), marking a significant shift in its climate financing strategy. The decision follows pressure from the United States, the institution’s largest shareholder, which argued that the target diverted the Bank from its core mission of poverty reduction and economic development. Although the financing target has been removed, the World Bank says it will continue supporting climate action through country-led projects and national climate commitments.

Key Overview

• The World Bank will retire its 45% climate finance target.
• The Climate Change Action Plan (CCAP) will be extended.
• The decision follows pressure from the U.S. administration.
• Climate finance exceeded $39 billion in 2025, with climate co-benefits reaching 48% of total financing.
• The World Bank says climate investments will remain driven by client countries’ priorities.

World Bank Revises Climate Finance Strategy

The World Bank Group has announced that it will retire its long-standing target of allocating 45% of its financing to projects with climate co-benefits while extending its Climate Change Action Plan (CCAP), marking a significant shift in the institution’s approach to climate finance.

The decision comes after increasing pressure from the United States, the World Bank’s largest shareholder, which argued that the climate financing target distracted the institution from its primary mission of reducing poverty and supporting economic growth.

Despite removing the formal financing target, the World Bank stressed that climate action will remain an important part of its development agenda and that future climate investments will continue to be guided by the priorities of partner countries.

Climate Finance Has Grown Significantly

The World Bank first established a climate finance target in 2020, committing to allocate 35% of its financing to projects with climate co-benefits over a five-year period, while ensuring that half of those investments supported climate adaptation and resilience.

The target was increased to 45% in 2023 as climate finance continued expanding across the institution’s operations.

Over the past five years, the World Bank’s climate financing has grown substantially.

Climate-related financing increased from approximately $17 billion in 2020 to over $39 billion in 2025, including $16.6 billion for climate adaptation projects and $22.6 billion for mitigation.

In 2025, the institution also exceeded its own target for the first time, with 48 percent of total financing delivering climate co-benefits.

U.S. Pressure Influenced the Decision

The policy change follows pressure from the Trump administration. President Donald Trump, which has repeatedly questioned the World Bank’s emphasis on climate finance.

Earlier this year, U.S. Treasury Secretary Scott Bessent argued that the institution should refocus on poverty reduction and economic growth rather than pursuing what he described as an arbitrary climate financing target.

According to Bessent, maintaining the 45% target could distort investment decisions and reduce the effectiveness of the World Bank’s development mission.

The United States has also declined to support previous international statements backing the institution’s climate agenda, reflecting broader policy changes under the current administration.

Climate Action Plan Will Continue

Although the climate finance target is being retired, the World Bank confirmed that its Climate Change Action Plan (CCAP) will continue beyond its original expiry date.

The framework aims to integrate climate mitigation and adaptation into the institution’s lending programmes while helping countries strengthen resilience against climate change.

Through the CCAP, the World Bank also provides technical assistance to governments seeking to reduce greenhouse gas emissions, improve climate resilience, and implement their Nationally Determined Contributions (NDCs) under the Paris Agreement.

According to the Bank, future climate work will remain firmly driven by the priorities and development plans of partner countries.

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Shift Towards Development Outcomes

The World Bank said it intends to place greater emphasis on development outcomes rather than financing targets.

The institution stated that its future climate work will focus on maximising development impact by supporting projects that deliver both economic growth and environmental benefits.

It also confirmed that it will continue reporting on greenhouse gas emissions and the proportion of projects that generate climate-related impacts, maintaining transparency around its environmental performance.

An independent evaluation of the Climate Change Action Plan has also been commissioned to assess how effectively it helps countries address climate challenges.

Climate Finance Remains Central to Global Development

The World Bank provides approximately $115 billion annually through loans, grants, guarantees, and equity investments to governments and private sector clients worldwide.

Its financing has supported major renewable energy and climate projects, including Egypt’s Benban Solar Park, Kenya’s Lake Turkana Wind Power Project, and more recently investments in green hydrogen and sustainable finance initiatives.

While the removal of the climate finance target marks a notable policy adjustment, the institution continues to play a central role in financing projects that support climate adaptation, clean energy, and sustainable economic development across emerging markets.

Debate Over Climate Finance Continues

The decision reflects the growing debate over how multilateral development institutions should balance climate action with broader economic development priorities.

Supporters of climate finance argue that investments in resilience, renewable energy, and emissions reduction are essential for achieving long-term development objectives, particularly as climate risks increasingly affect vulnerable economies.

Others contend that development institutions should retain greater flexibility in allocating capital based on individual country priorities rather than fixed financing targets.

The World Bank’s revised approach seeks to maintain climate support while giving greater emphasis to country-led development strategies and measurable development outcomes.

Outlook

The World Bank’s decision to retire its 45% climate finance target represents an important shift in the governance of international development finance while highlighting the growing influence of shareholder priorities on multilateral institutions. Although the formal financing target has been removed, the extension of the Climate Change Action Plan signals that climate action will remain embedded within the Bank’s broader development agenda. As countries continue pursuing ambitious climate and economic goals, the institution is expected to focus increasingly on delivering measurable development outcomes through projects that integrate poverty reduction, economic growth, climate resilience, and sustainable infrastructure rather than relying on predetermined financing quotas.

FAQs

1. Why did the World Bank remove its climate finance target?

The decision followed pressure from the United States, which argued that the 45% climate finance target diverted the institution from its core mission of reducing poverty and promoting economic growth.

2. Is the World Bank ending its climate programmes?

No. The Bank will continue its Climate Change Action Plan and says climate investments will remain guided by partner countries’ priorities.

3. How much climate finance did the World Bank provide in 2025?

The World Bank delivered more than $39 billion in climate finance during 2025, with climate co-benefits accounting for 48% of its total financing.

4. Will the World Bank still fund renewable energy and climate projects?

Yes. The institution says it will continue financing climate-related projects and supporting countries’ climate commitments while focusing more on development outcomes rather than fixed financing targets.

Sources: ESG today, ESG Dive, Net Zero Investor

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