The World Bank has launched an initiative to raise awareness, with the focus on integrating climate change considerations in all activities and decisions. As part of plans the Bank Group is issuing US$10 billion in Sustainable Development Bonds.
By this initiative, the World Bank will engage with investors to highlight the World Bank’s holistic approach to mainstreaming climate action.
In its newly updated Climate Change Action Plan, the World Bank intends helping countries integrate climate change into their development strategies and apply climate financing in ways that achieve the most desired impact.
Adopting and applying a “whole of economy” approach with developing country clients, it will help the World Bank mainstream climate considerations across its portfolio. This includes high emitting sectors as well as sectors not typically associated with climate action such as health, education, trade, and governance.
Anshula Kant, World Bank Group Chief Financial Officer remarked:
“Left unchecked, climate change will push 130 million people into poverty over the next decade. We must mobilize everyone and everything we can to reverse today’s climate trends and in doing so we need to support vulnerable communities and help them adapt.
“To achieve the scale necessary, we must go beyond just green projects to support the greening of entire economies. With investor engagement around our own issuance and climate strategy, we hope to illustrate to investors why a similar holistic approach is critical for the markets.”
Anshula Kant
World Bank commits half of funds for climate change adaptation
World Bank climate finance increased markedly in 2020 with over 90 per cent of all International Bank for Reconstruction and Development (IBRD) projects having climate components, representing 33 per cent of all commitments by value.
Noting the debilitating effects of climate change including droughts, floods and coastal erosion on developing countries, the World Bank committed to deliver at least half of funds for climate change adaptation.
Jingdong Hua, Vice President and Treasurer noted, “World Bank Sustainable Development Bonds provide investors with an opportunity to support positive climate impacts in developing countries…
“As previous World Bank investors have done… their participation signals their commitment to meeting the world’s challenges head-on. We are pleased to launch this initiative and look forward to engagement with investors ahead of COP26.”
Jingdong Hua
To do this effectively, the World Bank will leverage capital from member governments to raise funding in the capital markets from private entities.
Bernice Van Bronkhorst, Global Director, Climate Change, World Bank commented:
“… The funds raised will then support the financing of the full range of the World Bank’s development activities, which are also now aiming for greater climate impact. This is the kind of holistic approach that our recently announced Climate Change Action Plan is driving forward.”
Bernice Van Bronkhorst
Furthermore, the World Bank Sustainable Development Bonds are linked with the sustainability bond guidelines published by the International Capital Markets Association (ICMA).
Thus, the Bank’s engagement in the capital markets is to encourage investors take a comprehensive approach to mainstream climate and sustainability in all of their decision-making. This is to encourage building strategic partnerships to raise awareness for the role of private sector financing in development.
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