News: World Bank to increase climate change funding
On 7th April, the World Bank announced that it will spend 28% of its revenues on climate change mitigation and adaptation projects in developing countries. The World Bank will focus on environmentally-friendly transport and infrastructure projects as well as "smart" systems for agriculture projects –which use less water and energy and which conserve soil. The World Bank also plans to help bring in safety nets to provide quick support to people affected by a natural disaster for 50 million poor people by 2020.
In addition, the World Bank has identified global advocacy on climate issues such as water, fossil fuel reforms or integration of climate into finance for development as key priority areas for the coming years, hence covering a wide range of areas to tackle climate change: from advocacy and education to enhancing capabilities and finding innovative solutions.
The plan foresees different types of funding according to the needs of each region. For the Latin American region, for example, one of the aims for 2016-2018 is to foster social resilience. In addition, adaptation strategies will include investment strategies to "enhance resilience and improve disaster preparedness and [...] introduce new financial products to boost resilience". In Africa, the focus lies instead on enhancing resilience, food security, and energy access amongst others. It is worth noting that all projects considered for funding –including health, education and other development priorities– will be screened for their vulnerability to the impacts of climate change to ensure the funding is "cost-effective".
What does this plan mean for businesses?
For businesses impacted by natural disasters the World Bank’s pledge will be greatly welcome, since the strategies that will be put in place should improve the resilience of their countries and infrastructures to the effects of climate change and reduce operational and financial risks (such as continued business disruption).
For businesses already in the sustainability business, the World Bank's funding might translate into work opportunities in specific projects targeting developing countries. Hence, we would encourage these businesses to actively seek out a collaborative approach with the projects under the World Bank's wing.
For investors in critical areas, the World Bank pledge will provide them with the certainty required to continue making sustainable investments on new technologies such as “smart agricultural systems” and innovative climate change-related financial products. The greater focus on climate change resilience and adaptation is also a clear signal of upcoming policies and trends worldwide. As the corporate world is witnessing, an increasing number of businesses have already adopted the UN’s Sustainable Development Goals for a different number of reasons, including the commercial opportunities that arise with social/environmental challenges. And this trend will continue upwards. Against this backdrop, businesses should carefully review their environmental commitments to better assess its future strategy in the increasingly environmentally-conscious marketplace.
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