World Bank watchers have noticed David Malpass, its president, becoming more vocal on climate change of late. The Bank is not proposing any major change in policy, but if there is a more relaxed attitude at the top, it could free staff to push harder on some climate initiatives.
Some believe Malpass, appointed by President Trump in April 2019 after the abrupt departure of his predecessor Jim Yong Kim, may be repositioning to improve his chances of remaining in office if Joe Biden wins the US presidency.
Other stakeholders are pushing for a greener World Bank, too. On Wednesday ministers from six European countries and the EU wrote an open letter calling on the Bank and IMF to deliver “clear results on a green and inclusive recovery” and phase out oil and gas investments.
As Malpass had advised Trump in his 2016 campaign and been Treasury undersecretary, responsible for the multilateral development banks, insiders feared he would try to revolutionise the Bank. Giving testimony to Congress in December 2018, in 6,000 words Malpass did not mention climate once, but referred to China 29 times.
But Malpass soon impressed colleagues by not reorganising the Bank or overturning its policies on climate change and fossil fuels, making conciliatory noises to China and being easy to work with.
The Bank has been able to continue with its previously agreed target for 2016-20, to raise its climate financing from 18% of its commitments each year to 28%. It exceeded the target in 2019, at 32%, and achieved 30% in the financial year to June 2020.
It has also continued to support countries in preparing their Nationally Determined Contributions under the Paris Agreement.
“The World Bank hasn’t been backsliding on its existing commitments,” said Jon Sward, environment project manager at the Bretton Woods Project, an NGO monitoring the World Bank and IMF. “But in a sense it has been standing still, while other MDBs have been putting together more ambitious policies on mitigation.”
The Bank’s communications on climate have been muted under Malpass. Although the World Bank committed in 2015 to align with the Paris Agreement and is part of a joint MDB process working on Paris alignment, it rarely mentions the Paris Agreement publicly. Trump decided in June 2017 to pull the US out of the agreement.
Last year, the World Bank’s Action Plan on Climate Change Adaptation and Resilience did not mention Paris. Lifelines, a big report on resilient infrastructure, mentioned it once.
A joint Framework and Principles for Climate Resilience Metrics in Financing Operations, published by all the major MDBs last year, was not endorsed by the World Bank, though staff are understood to have pushed for this.
However, recently, Malpass has tweeted about climate change several times, and in a speech on October 5 he said: “I’m happy to say that, in fiscal year 2020, my first full year as president, the World Bank Group made more climate-related investments than at any time in its history.” The group is the largest multilateral climate financier, having committed $83bn in the past five years.
On Monday October 12, Malpass addressed the ministerial meeting of the Coalition of Finance Ministers for Climate Action. As usual, he avoided mentioning the Paris Agreement, nor did he refer to the threat of climate change directly. But he did say: “Low carbon stimulus programmes can drive new jobs that are sustainable, inclusive and equitable. It is critical that countries work toward their climate and environmental goals.”
He called for the termination of new coal and oil power generation plants and said “Many of the world’s largest emitters — both developing and developed countries — are still not making sufficient progress in this area.”
His comments were cautious and far from a resounding call to action like that given by Kristalina Georgieva, IMF president, at the same meeting.
But Sward said Malpass’s references to a low carbon recovery in this speech and the one last week were the first time he had spoken so explicitly about climate change mitigation.
In answer to a question from GlobalMarkets at his press conference on Wednesday, about whether the World Bank would set targets to increase its climate financing and reduce fossil fuel financing, Malpass did not answer in relation to fossil fuels, but repeated some of his remarks from recent speeches about the World Bank's climate financing.
Malpass said at the press conference: "Going forward, we want to step up those efforts. One of the ways we do that is the percentage of our commitments that have climate benefits. I think the achievement in the most recent fiscal year was 32%. And that's an ambitious target for the future as well."
Sonia Dunlop, senior policy adviser at E3G, the climate change thinktank, said: “It’s good to see Malpass starting to pay more attention to this issue — it’s something we’d encourage him to do more as part of supporting a green recovery.”
A test will come in November at the Finance in Common Summit in Paris, billed as ‘the first global meeting of all public development banks’. Some 450 institutions are expected to make a common commitment to a greener recovery, supporting the Sustainable Development Goals and aligning with the Paris Agreement. The World Bank committed to supporting the Agreement in 2015, but will now be asked to reaffirm its commitment.
Christian Donaldson, policy adviser on international financial institutions at Oxfam International in Washington DC, also said the Bank was "on track with its previous commitments" but had done "nothing new".
He said of Malpass: "It's true that in the last month or two he has been mentioning climate a bit more. But Covid-19, although it's a bad situation globally, also presents a lot of opportunities for the Bank and Malpass to show leadership, because there are a lot of discussions about the recovery and how to build back better. But in the Annual Meetings we've not heard anything ground-breaking. Looking forward, we're hoping to hear something more upfront and strong from him."
Rather than just continuing to fulfil old commitments, Donaldson said, "it will be great if he comes with a commitment saying the Bank will aggressively shift into renewables... [and commit to a] fossil fuel phase-out".
He added: "It will be interesting to see if Malpass changes his approach if Biden wins. The momentum inside the Bank is there, it's just that the head needs to join in."