Development banks' climate funding hits record, but World Bank pullback looms

Annual figures on the combined amount of climate financing provided by 10 of the world's biggest development banks showed almost $103 billion of the record total went to developing economies.

The European Investment Bank, which published the report, said it indicated MDBs were "on track" ​to meet climate finance targets announced at the COP29 U.N. climate change summit in Baku in 2024.

At that meeting, the lenders committed to ​providing at least $120 billion in annual climate finance to low- and middle-income countries by 2030, alongside $50 billion a year for ⁠high-income economies.

"These results show that multilateral development banks are delivering at scale and accelerating support where it is most needed," EIB Vice-President Ambroise Fayolle ​said.

World Bank decision

Observers, however, have questioned whether those key targets might be at risk following last month's decision by the World Bank to abandon its goal ​to devote 45% of its annual financing to projects related to climate change.

The bank, which had been under pressure from the Trump administration to scrap the climate lending target adopted during Joe Biden's presidency in 2023, said its shift was to focus on lending outcomes rather than input goals.

Monday's report showed the World Bank's importance to the 2030 ​target. It provided almost half of the $102.6 billion of climate funding that went to developing countries last year and has done so for the last ​five years.

The World Bank Group's Climate Director, Jamie Fergusson, said the numbers showed it was continuing to respond to demand for "climate-smart development" and that development and climate were ‌intertwined challenges.

EIB's ⁠Fayolle also backed the targets to be hit.

"I will not comment on a specific institution, but what I can say is when I look at the figures I am very optimistic about reaching the 2030 target," he told Reuters, adding that last year's 21% jump in funding to poorer countries had been "really impressive".

Climate commitments

Climate finance provided by multilateral development banks (MDBs) to low- and middle-income countries has doubled over the past five years, rising from $51.6 billion in 2021.

Monday's ​figures showed that mitigation projects, including ​renewable energy and emissions-reduction initiatives, accounted ⁠for $68 billion in 2025. Adaptation finance, aimed at helping countries cope with increasingly severe climate impacts, jumped 31% to $35 billion.

Lending for climate-related projects in high-income nations also increased to almost $60 billion last year from just over $31 billion in ​2021, with an additional $80 billion mobilised in private sector funding.

Danny Scull at environment-focused think tank E3G said he ​still expected the 2030 ⁠goal of $120 billion a year for low- and middle-income countries to be hit despite the World Bank's recent downshift.

That, though, was always meant to be "a floor for COP ambition" and hitting what he described as a "true" target of closer to $180 billion a year would require "continued innovation from MDBs and their shareholders."

At last year's COP30 ⁠climate talks ​in Brazil, multilateral development banks reaffirmed their commitment to continue scaling up support for countries ​pursuing low-carbon and climate-resilient policies.

This year's COP31, being hosted by Turkey in November, will seek to turn past decisions into action, the country's climate minister told Reuters in April, saying nearly $1 trillion ​was needed to help developing countries meet climate targets.