The fate of a World Bank climate target is hanging in the balance as the Trump administration pressures the institution to jettison what it calls a “distortionary” and “nonsensical” policy.
The bank pledged three years ago to devote 45 percent of its funding to climate-related projects by 2025. It exceeded that goal by directing $39.2 billion, or 48 percent of its financing last year, to projects with climate benefits.
It came as the Trump administration has called on the institution to abandon the target and increase the number of natural gas projects in its portfolio. Now, the bank is confronted with difficult choices as it races toward the climate target’s expiration on June 30, with management leaving the issue in the hands of the bank’s board of directors, according to three people who were granted anonymity to talk about internal discussions. The board meets this week.
“There has to be some compromise cooked up and that comes to the board, but at the moment, management is waving it away, and the U.S. is no, no, no and no,” said one official who represents a developed country.
“I don’t think this gets resolved by the end of the month,” they added. “The door is just shut.”
The U.S. holds sway over the bank’s decisions as its largest shareholder, making it vulnerable to the Trump administration’s wide-ranging efforts to dismantle climate programs. In April, Treasury Secretary Scott Bessent maligned the bank’s focus on climate finance initiatives, which he argued had weakened its efforts to reduce poverty and boost economic growth.
“We welcome the coming expiration of the Climate Change Action Plan, and upon its long-overdue expiration, expect the Bank to immediately shift its myopic focus on climate and financing volumes to one that emphasizes high-quality, durable projects,” Bessent said in a statement at the time, referring to the overarching policy of the World Bank Group.
In a statement emailed over the weekend, a Treasury spokesperson said the U.S. “looks forward to the World Bank removing its 45 percent climate finance targets and refocusing on its core mission.”
“We are engaging extensively with other Board Members and [capitals] to return the World Bank back to its core mission of reducing poverty and increasing economic growth, and we expect the Bank will abandon its pursuit of arbitrary climate financing targets that do little to lift people out of poverty,” the spokesperson said.
The White House declined to answer questions about whether it was refusing to negotiate with the bank on the climate target or if it would accept anything less than its total abandonment.
“For years, the Dumocrats, radical globalist organizations, and climate extremists have replaced commonsense energy dominance with the ‘Green New Scam’ by making bogus ‘climate change’ claims that we are destroying the planet,” White House spokesperson Taylor Rogers said in a statement. “President Trump has been clear: he will not allow the United States’ economic and national security to be jeopardized by nonsense from climate alarmists.”
Other countries have pushed back on the U.S. position. Twelve executive directors who represent more than 100 nations — many of which borrow money from the bank — called on the bank last month to extend the climate plan for a year so it could be assessed by independent evaluators.
“The bank is a critical institution among others, and its support must continue to respond to country-led priorities, circumstances and choices,” the group led by China and Brazil said in a statement to POLITICO.
It included countries that are typically aligned with President Donald Trump and his disparaging rhetoric on climate change, such as Saudi Arabia and Russia.
It followed a separate statement from 19 of the bank’s 25 executive directors last year that expressed support for the climate goals.
“There is a fairly strong consensus, on a board that makes most of its decisions based on consensus, that this is an essential issue for the institution to keep working on,” said Jon Sward, environment manager at the Bretton Woods Project, a World Bank watchdog.
The bank has been less vocal about climate change since Trump took office, putting a greater emphasis on energy access. Letting the climate plan expire would likely add to the perception held by some officials from other countries and climate advocates that the bank is bending to Trump’s will. It could also stress other climate finance targets if the amount of funding going toward those projects declines as a result.
“On our Climate Change Action Plan, we’re in active conversation with our shareholders about what comes next — focusing together on what matters most to our clients: smart development and real outcomes,” a World Bank Group spokesperson said in a statement.
A ‘destructive’ push
The Climate Change Action Plan focuses on increasing the amount of money the bank puts toward projects that cut climate pollution, strengthen countries’ ability to adapt to climate impacts and align lending with the goals of the Paris Agreement, which calls for preventing temperature rise from surpassing 2 degrees Celsius since the Industrial Revolution.
The five-year plan — an extension of an earlier plan created in 2016 — set an initial target of devoting 35 percent of the bank’s annual financing to climate projects by 2025. World Bank President Ajay Banga boosted it to 45 percent at the U.N. climate talks in 2023, saying “we have never been better positioned to deliver the progress that is demanded.” (The plan was later extended to 2026.)
In 2024, a group of multilateral development banks that included the World Bank Group announced that their climate financing would reach $120 billion by 2030, a move that backed a U.N. goal to deliver $300 billion a year in climate finance for developing countries by 2035.
The U.S. has since left the Paris Agreement and will exit the underlying United Nations Framework Convention on Climate Change early next year. Other countries on the World Bank’s board remain committed to the $300 billion goal.
“A multilateral institution only works if you have your special interests, but you nevertheless think about the common good and progress, so you make some trade-offs,” said Jürgen Zattler, a former executive director for Germany at the World Bank Group during Trump’s first term. Letting the plan expire “will signal that the U.S. government is really pushing ahead, and in a kind of destructive way.”
Room for compromise?
The 45 percent target appears to be the Trump administration’s main irritant, according to the three people who are familiar with the discussions. One compromise could be to drop the finance target and extend the climate action plan, while retaining other elements such as producing reports that outline individual countries’ actions on climate and development goals and Paris-aligned lending.
“The political stakes for Bessent are quite low,” said Matt Swinehart, a former Treasury official who’s now a managing director at Rock Creek Global Advisors. “He just needs to be able to tell Trump that in some general sense he is supporting oil and gas at these institutions.”
Dropping the 45 percent target may not lead to a halt of climate finance efforts, some experts said, since they are built into other agreements that govern different arms of the bank.
An agreement last year to replenish the International Development Association, the bank’s fund for the poorest countries, set a benchmark for steering 45 percent of the fund’s total commitments toward climate projects.It also commits the bank to developing a successor to the climate change action plan.
The 45 percent target has attracted scrutiny from critics. A study published last year found that most of the increase in financing has gone to projects with “low climate components.”
But the target has also elevated investments in climate projects and tracked their progress. Losing it could represent a broader weakening within the bank on climate change as global impacts are growing, said a former World Bank official who was granted anonymity to speak freely.
“I don’t think the target itself or having a plan is necessarily a key driver [of climate action],” the person said. “I think what’s more important is the underlying commitment institutionally within the World Bank, and I think that is eroding.”
