Citizens’ Climate International, the umbrella group to which we are affiliated, has this year been involved in an action to support the transformation of the World Bank Group needed for the 21st century. There is a growing awareness and acceptance by the World Bank Group that a transformation is needed to move the whole world away from reliance on fossil fuels and to mitigate the damage already done. Having the moral and economic power of the World Bank behind the move away from investment in and subsidisation of fossil fuels would be one of the most effective ways to draw a line under the fossil fuel era and achieve the goal of a just transition for all to a world where extreme poverty and inequality has been eradicated.
The new President of the World Bank, Ajay Banja is already planning to change the mission statement of the World Bank to acknowledge that we need to ‘create a world free from poverty on a liveable planet’. Progress is happening and we need to play our role in supporting it.
CCL UK representatives contributed these statements on why the action is needed:
Catherine Dawson
Citizens’ Climate International Leader, Devizes, UK
“We stand at a crossroads, here in the UK we have had a decade of gradually increasing extreme weather events causing floods, record temperatures and even houses igniting in a London suburb! Despite these warning signs our Government is still committed to maximising the exploitation of fossil fuels. We need the World Bank Group to transform to make it fit for the challenges of the 21st century, enabling the investment needed in the technologies and services which will eliminate poverty, hasten the day when fossil fuels become a stranded asset and thus stop climate change, for all our futures.”
David Waltham
Citizens’ Climate International Leader, Marlborough, UK
“Campaigning at the national level for action on climate is hard work much of the time — governments and industry change only slowly. The right World Bank reforms would be an International step change, moving the whole world forward enormously and all at once.”
CCI’s action made an impression at the World Bank Group Spring meetings.
It is clear that our ongoing involvement is contributing to the sea change needed in attitudes and actions of international financial institutions to support a liveable world.
CCI watched with interest the Paris Summit negotiations a few weeks ago. The World Bank Group issued this statement on the progress made at the Paris Summit:
June 22, 2023—The World Bank Group today announced a suite of new and expanded actions to help countries respond quickly and effectively to an ever-growing onslaught of crises.
At the Summit for a New Global Financial Pact, Ajay Banga announced an expanded toolkit for crisis preparedness, response, and recovery that includes: (1) pausing debt repayments; (2) redirecting financing; (3) linking crisis preparedness and financing; (4); backstopping development projects with private sector support, and (5) building enhanced catastrophe insurance without debt.
The World Bank Group aims to create a world free of poverty on a livable planet. We work to make people better prepared for threats of any kind by sharing our expertise, building resilience, and insuring against risks.
Elements of the new comprehensive toolkit include:
1. Offering a pause in debt repayments so countries can focus on what matters, not worrying about the bill: To allow countries to focus on meeting the urgent needs of their people instead of on loan repayments, the World Bank Group will launch Climate Resilient Debt Clauses. These will provide a pause in debt repayments for the most vulnerable countries in times of crisis or catastrophe. We will start these new crisis debt clauses with the most vulnerable clients, and we intend to learn and work with all stakeholders to expand coverage.
2. Giving countries new flexibility to quickly redirect a portion of their funds for emergency response, so cash is immediately accessible: The World Bank Group will put in place a new rapid response option, offering all client countries the ability to immediately repurpose a portion of their lending portfolio for emergency needs when a crisis occurs – for example to redeploy undisbursed funds in longer-term infrastructure projects for immediate disaster response.
3. Helping governments build advance-emergency systems, so they are ready to respond on day one: To allow more countries to build emergency systems and have quick-disbursing finance available in times of crisis, the World Bank Group will increasingly link investments in prevention and preparedness with financing for catastrophe and crisis response support. We will also step up our expertise and analytical support available to every country to design a crisis preparedness and response financing strategy.
4. Providing new types of insurance that will backstop development projects, allowing work to get back on track quickly: The World Bank Group will evolve its tools to more effectively support private sector clients in crisis preparedness and response. This will enable businesses to sustain operations and protect jobs, building resilience and long-term sustainability. The Multilateral Investment Guarantee Agency is partnering with the private insurance industry through the Insurance Development Forum, a public-private partnership, to design an innovative parametric insurance product, and the International Finance Corporation has designed a private sector-led crisis response solution to support financial institutions in addressing the impact of natural disasters due to climate change.
5. Building enhanced catastrophe insurance for providing resources without adding to debt: The World Bank Group will build on its catastrophe insurance solutions such as Cat Bonds and give all countries the option of embedding catastrophe insurance into lending products. Because not every country can afford this insurance, we will work with donors to make these products affordable for lower-income countries, including funds that can buy down insurance premiums. This will develop enhanced catastrophe insurance products that can provide resources for disaster-struck countries without adding to their debt.
Across countries, and as a result of these measures combined, billions of dollars could be available for crisis response.
CCI report on the Paris Summit for a New Global Financing Pact: Meaningful progress for relief to emerging economies, but more needed
JUNE 23, 2023 — As the Summit for a New Global Financing Pact winds up in Paris, Citizens’ Climate International sees meaningful progress being made to provide debt relief to developing nations struggling with the impact of climate change. That progress, hopefully, will set the stage for further commitments at the Annual Meetings of the World Bank and IMF in October and at the COP28 climate conference in December.
Structural reforms and immediate relief are needed to help emerging economies adapt to a changing climate and make a just transition to clean energy.
“Every human being has the right to a livable world,” said CCI Executive Director Joe Robertson. “To secure that livable world, rich nations and international financial institutions must transform their standard business models and prioritize support to vulnerable countries already facing unaffordable costs.”
As Rachel Kyte, Dean of the Fletcher School at Tufts University, put it in a recent op-ed, the challenge is “how to bolster investment in emerging markets and developing economies in a way that does not incur debt.”
One good piece of news from the summit was the announcement from the World Bank that it was launching a comprehensive toolkit to support countries after natural disasters. Among provisions in the toolkit is the option on new loans to pause payments on debt when disaster strikes “to allow countries to focus on meeting the urgent needs of their people instead of on loan repayments.”
“This is a much needed step in the right direction,” said Robertson, “and in the months ahead, we look forward to seeing wider reforms that structurally improve the debt and finance positions of vulnerable countries.”
Earlier this year, during the spring meetings at the World Bank and IMF, CCI members from 31 countries sent personal emails to their own countries’ executive directors at the World Bank Group asking the Bank. The letters asked for reforms that:
- Support for the Bridgetown Initiative;
- Advance human rights and gender equality;
- Welcome meaningful, ongoing citizen and stakeholder input;.
- Investigate direct delivery of funds to households, as a foundational support for climate-resilient development.
More good news at the summit: A group of wealthy nations pledged $2.7 billion to help Senegal roll out renewable energy, and Zambia secured a deal to restructure $6.3 billion owed to other governments.
“Considering that developing countries contributed the least to the climate crisis but suffer extreme impacts that can cost more than their entire economic output, these deals represent critical steps toward climate justice, though much more is needed,” said Robertson. (End of press release).
Encouraged by the progress so far this year CCI is now asking that World Bank Group Reforms take cognisance of these issues:
World Bank financing must address the longer term needs of building climate-resilient infrastructure. Infrastructure projects generally take about 30 years and restoring nature as a mitigation, biodiversity and adaptation plans could take generations. Thus, financing must reflect that reality.
- Recognizing the sovereignty and rights of Indigenous peoples are essential for sustainable conservation efforts. Thus, preservation of nature on Indigenous lands must be over and above the ‘30-by-30’ benchmark set by the United Nations Global Biodiversity Framework.
- We must not only protect countries from the climate impacts, stranded assets are also a concern. Guardrails for financing are needed to avoid greenwashing. The World Bank Group and the Private Partnerships must abide by the UN document Integrity Matters.
- Hampering the capacity of the multilateral development banks to unwind global economies from fossil fuels is the lack of a global framework. The World Bank and IMF should join the European Union, Fiji, Austin (Texas), the World Health Organisation and a plethora of organisations, governments and thought leaders in asking for the United Nations to develop a Fossil Fuel Non Proliferation Treaty.
Further CCI analysis on the Paris Summit and the actions needed going forward.
CCI affiliate organisations will be contacting their World Bank Group executives with these new asks until mid July. Watch this space!