Imagine if humanity decides it doesn’t have enough amusement parks. All the world’s nations announce they will be financing new ones across the planet. Bankers stand next to models of future parks and hand comically large loan checks to the developers. It’s not nearly enough to end the global amusement-park crisis, but they still win accolades and shareholder approval for doing their part.
But then, years later, we discover some of the proceeds of these loans weren’t spent on amusement parks at all but on whoopee-cushion factories and speedboats. Others did go to amusement parks but were wildly over budget. These supposed answers to our amusement-park prayers weren’t quite what they seemed. How could anybody trust amusement-park financing again?
This analogy may be working too hard, but it loosely describes an issue with the current state of global climate financing. The World Bank is the planet’s largest public bankroller of projects to help countries fight and adapt to climate change. But its accounting loses track of how its money earmarked for climate delivers tangible results, according to a new report by the nonprofit group Oxfam. The report suggests actual spending on climate projects differed from budgeted amounts, either higher or lower, by 26% to 43% between 2017 and 2023, resulting in an accounting gap of $24 billion to $41 billion.
To put such numbers in context, $41 billion would almost be enough to cover an entire year of World Bank financing; the bank says it delivered about $43 billion in the 2024 fiscal year, which ended on June 30. That was 44% of total multilateral development bank (MDB) financing during the fiscal year. And $41 billion would go a long way toward the $100 billion the world’s richest countries have pledged to spend annually on climate financing in low-income countries.
What could be going wrong here? According to Oxfam, the main issue is that the World Bank accounts for its climate financing at the time of project approval rather than at the time of project completion. Records on what actually gets spent are spotty and inconsistent.
“This is like asking your doctor to assess your diet only by looking at your grocery list, without ever checking what actually ends up in your fridge,” Kate Donald, head of Oxfam International’s office in Washington, said in a press release.
This is important for a bunch of reasons. For one, the World Bank is partially financed by taxpayer dollars from its member countries, the biggest being the US. It would be good to know exactly how the money it lends gets spent. As the biggest MDB, the World Bank also sets the standards for its peers.
What’s more, though the bank’s member countries have vowed to finance the fight against climate change, actually getting money out of them has been harder than getting a live human on a customer-service call. It took them years to finally meet their $100 billion climate-finance pledge, the biggest chunk of which came from MDBs like the World Bank.
