Quora Answer: Is the World Bank Right to Drop Its Climate Finance Target?

The following is my answer to a Quora question: “Do you think the World Bank is right to drop its climate finance target?”

The World Bank’s Board of Directors voted on 30^th June 2026 to drop its target requiring 45% of financing to carry climate co-benefits.  This was a terrible idea, and the timing alone proves it.  The target had already been met.  In 2025, 48% of World Bank Group financing carried climate co-benefits, exceeding the 45% goal first set at COP28.  Climate finance under the Climate Change Action Plan, launched in 2021, had nearly doubled by 2025.  A target abandoned the moment it succeeds is not being retired for inefficiency.  It is being retired because someone with the power to demand its removal did not like what it was funding.

United States Treasury Secretary Scott Kenneth Homer Bessent made that demand explicit at the April 2026 World Bank and IMF spring meetings, calling the target “distortionary” and arguing it “breeds inefficiency, distorts economic decision making, and moves the Bank away from its core mission.”  Russia and Saudi Arabia backed the same position.  Two of the world’s largest fossil fuel exporters, and the world’s largest historical greenhouse gas emitter under a president who has called climate change “the greatest con job ever perpetrated on the world,” combined their shareholder weight to strip a functioning, already-successful target out of the institution meant to fund the world’s poorest countries through the transition those same countries did the least to cause.

The Green Climate Fund tells the identical story, in real time, on a shorter fuse.  In February 2025, the United States rescinded roughly US$4 billion in outstanding pledges to the GCF, the first country ever to formally withdraw a commitment already made.  The board met afterwards with an empty seat where the American representative should have sat.  Germany and Sweden pushed high-income developing nations to help cover the gap.  Saudi Arabia, oil wealth and all, called the suggestion “unacceptable.”  In spring 2026, the United Kingdom followed the American lead, halving its own GCF pledge from £1.6 billion to roughly £815 million.  By November 2025, a planned pledging event at COP30 for the Least Developed Countries Fund and the Special Climate Change Fund was simply cancelled, for lack of contributor interest.  The UNEP Adaptation Gap Report puts current adaptation needs at twelve to fourteen times the finance available.  This is not one government having a bad year.  It is a pattern, repeating across every major public climate fund simultaneously, and the World Bank’s own target just joined it.

The Loss and Damage Fund Cannot Fill the Gap Either

The Loss and Damage Fund closed COP28 with pledges totalling just over US$600 million.  This was smaller than the cost of building the Dubai Expo City venue hosting the conference.  Pledges are not disbursements.  They are promises, revocable the moment a donor government’s domestic politics shift, exactly as the GCF, the Adaptation Fund, and now the World Bank’s own target has each demonstrated within the same eighteen-month window.  Swiss Re Institute projects climate change could wipe out up to 18% of global GDP by 2050 under a 3.2°C warming scenario.  A fund built on voluntary pledges from governments now actively rescinding pledges elsewhere was never going to raise anywhere close to the trillions that figure implies.

A Secondary Compliance Carbon Market is the Answer

Public multilateral finance is hostage to whichever government holds the largest voting share in any given electoral cycle.  A genuine secondary market for compliance-grade carbon credits is not.  Article 6’s rulebook, finalised at COP29, and the Paris Agreement Crediting Mechanism, fully funded and operational following COP30, finally give carbon credits the legal and financial infrastructure to trade as a genuine, liquid asset class rather than a voluntary offset nobody can price reliably.  The EU Emissions Trading System offers the working proof of concept: it has cut covered emissions by 51% since 2005 and raised over €265 billion in cumulative revenue, funded entirely by market participants paying for verified carbon allowances, with no government pledge conference required and no single shareholder able to rescind the mechanism on a whim.  A functioning secondary market creates enforceable claims, priced by private capital chasing genuine returns, immune to a change of Treasury Secretary or a new administration’s rhetoric about “hoaxes.”  Private capital does not abandon a position because Washington’s politics shifted.  It abandons a position when the underlying asset stops performing, and a properly regulated compliance market gives carbon credits that discipline – the discipline every public pledge fund examined here has just proven it lacks.

The Dire Consequence of Political Expediency

Every developing nation, and every private investor, now watching the World Bank abandon a target it had already exceeded, the United States rescind a formal pledge outright, and the United Kingdom quietly halve its own commitment months later, has learned the same lesson twice over in eighteen months.  Public climate finance commitments are not durable.  They are conditional on domestic political convenience in whichever country holds the largest shareholding, and that conditionality poisons every future pledge with the justified suspicion that it will evaporate the moment a different administration takes office.  That is not merely bad optics.  It actively discourages the long-term private investment climate adaptation and mitigation genuinely need, because no serious capital allocator builds a multi-decade infrastructure plan around a funding source proven, across three separate institutions now, to disappear on a single shareholder’s whim.  A secondary compliance carbon market does not solve every funding gap.  It solves the one public finance has just proven, repeatedly, it cannot: durability that survives an election.

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Terence Nunis | Executive Chairman, Equinox Zenith & Red Sycamore | Author, The 1% Playbook: The Billionaire Cheat Code