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

LONDON — Multilateral development banks (MDBs) committed a record $162.5 billion in climate financing last year, according to a report released by the European Investment Bank (EIB) on Monday. However, concerns remain that future climate funding targets for poorer countries could be at risk following the World Bank’s decision to move away from key climate lending goals.

The combined climate financing figures from 10 of the world’s largest development banks showed that nearly $103 billion of the total funding was directed toward developing economies.

The EIB, which published the report, said the figures indicated that MDBs were on track to meet climate finance commitments announced during the COP29 United Nations climate summit in Baku in 2024.

Under those commitments, development banks pledged to provide at least $120 billion annually in climate financing to low- and middle-income countries by 2030, along with $50 billion per 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 raises concerns

Despite the record funding, observers have questioned whether climate finance targets could be affected by the World Bank’s recent decision to abandon its goal of allocating 45% of its annual financing to climate-related projects.

The World Bank, which faced pressure from the Trump administration to remove the climate lending target introduced during Joe Biden’s presidency in 2023, said the change was intended to focus more on measurable lending outcomes rather than specific financing targets.

The report showed the World Bank’s significant role in meeting the 2030 climate finance goal. The institution provided nearly half of the $102.6 billion in climate funding directed to developing countries last year and has remained the largest contributor over the past five years.

Jamie Fergusson, the World Bank Group’s climate director, said the figures demonstrated the institution’s continued response to demand for “climate-smart development,” adding that development and climate challenges were closely connected.

Fayolle also expressed confidence that the targets would be achieved.

“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,” Fayolle told Reuters, noting that the 21% increase in climate funding for poorer countries last year was “really impressive.”

Climate commitments continue to grow

Climate financing from MDBs to low- and middle-income countries has doubled over the past five years, increasing from $51.6 billion in 2021.

The latest figures showed that climate mitigation projects, including renewable energy and emissions reduction programs, received $68 billion in 2025. Funding for climate adaptation efforts, which help countries manage the effects of worsening climate impacts, rose 31% to $35 billion.

Climate-related lending for high-income countries also increased, reaching nearly $60 billion last year from slightly more than $31 billion in 2021. The financing also helped mobilize an additional $80 billion in private sector investment.

Danny Scull of environment-focused think tank E3G said he still expected MDBs to achieve the $120 billion annual climate finance target for low- and middle-income countries by 2030 despite the World Bank’s recent policy shift.

However, he said the goal was only intended as a minimum level of ambition and that reaching a more comprehensive target of around $180 billion annually would require continued innovation from development banks and their shareholders.

During last year’s COP30 climate talks in Brazil, MDBs reaffirmed their commitment to increasing support for countries pursuing low-carbon development and climate-resilient policies.

The upcoming COP31 climate summit, hosted by Turkey in November, will focus on turning previous climate commitments into concrete action. Turkey’s climate minister told Reuters in April that nearly $1 trillion would be needed to help developing countries achieve their climate goals.

— Reporting by Marc Jones and Simon Jessop; Editing by David Goodman, Helen Popper and Lincoln Feast/Reuters