However, another aspect of the G8 summit that deserves attention is the G8’s endorsement of Climate Investment Funds administered by the World Bank. In so doing, the G8 also welcomed the Bank’s “significant progress” in mobilizing a Clean Energy Investment Framework. The World Bank began work on this framework in 2005 in response to the G8 communiqué from its Gleneagles summit, which recognized that the multilateral development banks’ investments and expertise should be used to help developing countries choose sustainable energy options. But the Framework has had limited impact on the Bank’s own operations. WRI analysis shows that as late as 2007, more than 50% of the World Bank’s lending in the energy sector still does not consider climate change considerations at all.
Since the Climate Investment Funds were first announced early this year, public controversy has erupted over the credibility of the World Bank serving as a financial instrument in a post-2012 climate change agreement. The Bank’s track record on climate change issues is weaker than its rhetoric. Its record of forcing unpopular macro-economic reforms on developing countries makes many global stakeholders nervous about the implications of this new role. These controversies have highlighted the need for reform of the multilateral development banks (MDBs).
For its part, the G8 did emphasize the need to “work on reforming and adapting international institutions so that they be able to respond effectively” to climate change.
A key reform priority of the MDBs must be to mainstream climate change considerations into their decision-making. The cost of carbon needs to be considered in all investments they support, and these calculations must include a rigorous accounting for all greenhouse gas emissions.
The World Bank in particular must demonstrate measurable progress in advancing the climate change and clean technology agendas in all aspects of its activities.