Understanding the World Bank’s role in climate finance

Abstract As the most well-resourced multilateral development bank, the World Bank is expected to play a central role in international climate finance (CF). However, systematic analysis of its CF projects remains limited, raising key questions such as what qualifies as a CF project, how the Paris Agreement has influenced the Bank’s CF, and whether CF projects are directed to areas of greatest need. Utilizing statistical analysis and natural language processing, this study offers a novel examination of the Bank’s CF projects. To provide a nuanced and detailed picture, we uniquely distinguish between the Bank-financed “pure” CF projects—those dedicated exclusively to climate objectives—and “mixed” CF projects, which combine climate aims with other priorities. Although there has been a significant increase in the Bank’s CF post-Paris, this rise is primarily driven by mixed CF projects with low climate components. Furthermore, while vulnerable countries and large emitters have received more mixed CF projects following the Paris Agreement, they have not received more pure CF projects. The findings indicate that the Bank incorporates climate goals when and where it can. The study provides insights into the pressing issue of CF flows from wealthier to poorer countries.