INSIDER: The World Bank’s Policy Lending Can Better Support Climate Action

The World Bank has significantly increased its use of development policy finance (DPF) to provide fast budget support to countries during the COVID-19 pandemic. While many of these loans contain prior actions with positive environmental co-benefits, few have climate change as their overarching objective. The author argues that the Bank must update its outdated 2004/2008 guidance for assessing environmental impacts, improve the reporting of negative effects, and actively promote climate-focused policy reforms to ensure long-term sustainable recovery.

• The World Bank significantly increased its development policy finance (DPF) commitments in the first half of 2020, approving 62 operations totaling approximately $14.6 billion between January and July, which surpassed the total commitments for the entire 2019 fiscal year of $13.8 billion.
• A review of 26 representative DPF operations showed that while most contained at least one prior action with positive environmental effects, only 17 of the 62 total DPF operations approved in 2020 had an overarching development objective related to climate change or the environment.
• The World Bank's internal processes for assessing the environmental impact of prior actions are outdated and potentially unreliable; the Bank relies on guidance from 2004 and 2008, and a past Independent Evaluation Group (IEG) study found that staff underreported potential negative environmental risks in 66 out of 100 operations between 2005 and 2014.
• Specific examples of climate-focused DPF operations include programs in Vietnam for cleaner energy and transport, St. Vincent and the Grenadines for disaster resilience, Uruguay for agricultural adaptation, and Côte d'Ivoire for green growth in the cocoa sector and renewable energy.

APA

World Resources Institute (2020). INSIDER: The World Bank’s Policy Lending Can Better Support Climate Action. https://www.wri.org/technical-perspectives/insider-world-banks-policy-lending-can-better-support-climate-action

Chicago

World Resources Institute. INSIDER: The World Bank’s Policy Lending Can Better Support Climate Action. 2020. https://www.wri.org/technical-perspectives/insider-world-banks-policy-lending-can-better-support-climate-action.

Wikipedia

{{cite report |author=World Resources Institute |title=INSIDER: The World Bank’s Policy Lending Can Better Support Climate Action |date=7 October 2020 |url=https://www.wri.org/technical-perspectives/insider-world-banks-policy-lending-can-better-support-climate-action |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldresourcesinstitute2020insider, author = {{World Resources Institute}}, title = {{INSIDER: The World Bank’s Policy Lending Can Better Support Climate Action}}, institution = {World Resources Institute}, year = {2020}, month = oct, url = {https://www.wri.org/technical-perspectives/insider-world-banks-policy-lending-can-better-support-climate-action}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }