The World Bank Climate Work has entered a new phase, prompting questions about what the future holds for global climate finance. While the institution has decided to retire its widely discussed target of directing 45% of its financing toward projects with climate benefits, experts believe this change is unlikely to derail its broader climate agenda.
Rather than signalling a retreat from climate action, the decision reflects a shift in how the World Bank plans to measure its impact. With its Climate Change Action Plan (CCAP) being extended, specialists say the bank is still positioned to support clean energy, climate resilience, and sustainable development across developing countries.
Climate strategy continues with a stronger focus on results
The decision comes after months of discussions among the World Bank’s shareholder governments. Although the 45% climate finance target has been retired, the bank has chosen to continue its Climate Change Action Plan, which has played a significant role in shaping its climate-related investments since its introduction in 2021. Experts view this outcome as a balanced compromise. Danny Scull, Senior Policy Advisor at E3G, said the final decision could have been far more disruptive. According to him, while a more ambitious outcome would have been preferable, the continuation of the Climate Change Action Plan makes it less likely that the World Bank will significantly reduce its climate efforts.
The plan has helped transform the bank’s approach to climate finance over the past few years. Since its launch, climate-related financing has nearly doubled, reaching $39.2 billion in 2025. Around 48% of the bank’s financing last year delivered climate co-benefits, surpassing the original target. The United States, the World Bank’s largest shareholder, had pushed for the Climate Change Action Plan to end alongside the removal of the climate finance target. However, several European governments and a broad coalition of developing countries supported extending the programme, ultimately helping preserve the wider framework. In May, executive directors representing nearly 100 countries, including China, Brazil, Saudi Arabia, and Russia, also requested that the Climate Change Action Plan be extended and independently reviewed.
Measuring outcomes instead of funding percentages
Going forward, the World Bank Climate Work will place greater emphasis on measurable development outcomes rather than the percentage of lending dedicated to climate projects. The institution plans to assess indicators such as greenhouse gas emissions avoided and the number of people better protected from climate-related risks. The United Kingdom welcomed this approach, describing the extension of the Climate Change Action Plan as an important step while stressing that stronger accountability for results will be essential. Despite retiring its headline climate finance target, the World Bank is expected to continue tracking climate finance across most of its operations. This is because several institutions within the World Bank Group continue to operate under existing climate-related mandates.
For instance, the International Development Association (IDA), which supports the world’s poorest countries, has committed to allocating 45% of its financing to climate-related activities through 2028. Meanwhile, the International Bank for Reconstruction and Development (IBRD) is expected to maintain its goal of directing 30% of its financing toward projects with climate benefits. Joe Thwaites, a climate finance expert at the Natural Resources Defense Council (NRDC), said these commitments provide an important safeguard. He noted that many client countries continue to prioritise investments in clean energy and climate resilience, helping maintain demand for climate-focused financing. The World Bank also plays a central role in supporting international climate finance commitments. Multilateral development banks remain key contributors toward helping developed countries meet global climate finance goals for developing nations.
Although some observers describe the removal of the headline financing target as a setback, several experts do not expect immediate reductions in climate funding. Rajneesh Bhuee of campaign group Recourse said the decision appears to ease political pressure while allowing the bank’s existing climate work to continue. At the same time, experts believe shareholder governments should continue monitoring the bank’s performance to ensure climate commitments translate into meaningful action. Should climate finance begin to decline in the future, some suggest donor countries may choose to strengthen support for other international financial institutions that continue prioritising climate action. While the headline target may be gone, the broader World Bank Climate Work remains in place. With the Climate Change Action Plan continuing and a renewed emphasis on measurable outcomes, experts believe the institution is still positioned to support climate resilience and sustainable development in the years ahead.
