Amid the interconnected global crises of climate change, biodiversity loss, and pollution, the World Bank is prioritizing climate action mainly through support for the energy transition, a crucial but incomplete solution for reducing greenhouse gas emissions. According to the UN’s Intergovernmental Panel on Climate Change, conserving nature offers a highly cost-effective pathway for climate mitigation, alongside wind and solar energy. Natural carbon sinks, such as forests, land, and oceans, currently absorb approximately 40% of global CO2 emissions from human activities annually. Biodiversity and nature-based solutions are even more critical for climate adaptation, as they bolster ecosystem resilience and act as natural buffers against climate-related disasters.
While the Bank positions itself as a leading global financier of both climate action and nature, its investment patterns tell a different story. Official data, summarized by BIC, show that the Bank’s active energy loans total US$38.6 billion—over six times the amount allocated to biodiversity (US$6 billion), and nearly four times more than the combined funding for biodiversity and forests (US$9.7 billion). Even considering that energy projects are typically more capital-intensive, the disparity remains stark: the number of biodiversity and forest-related(1) projects (133) represents less than 40 percent of the Bank’s energy-related projects (337).
A recent evaluation by the World Bank’s Independent Evaluation Group (IEG) has identified significant contradictions and gaps in the Bank's approach to biodiversity. The report highlights the weak integration of biodiversity into productive sectors, shortcomings in risk management and compensation measures, as well as governance and policy gaps. These gaps result in a failure to meaningfully incorporate biodiversity objectives into project design and in the inconsistent use of metrics to measure outcomes. As a result, the Bank may not only approve a project that may be harmful to biodiversity, but in some cases also label it as nature-positive. One such case is the project in Paraguay, “Scaling up financing for sustainable forestry”, a misleading title for a project that promotes monoculture plantations and risks pushing the deforestation frontier into areas of high biodiversity. It is also worth noting that IEG highlights that “a monoculture plantation of exotic trees might provide slope stabilization, flood risk mitigation, and carbon sequestration, but provides limited biodiversity benefits”.
These issues are compounded by the lack of an integrated standalone biodiversity strategy or action plan at the World Bank, one that could consistently define clear objectives, measurable indicators of progress, and appropriate resource allocation for biodiversity.(2) This differs from other pair institutions, such as the Asian Development Bank (ADB) and the Inter-American Development Bank (IDB), which have developed institutional approaches to scaling up biodiversity finance or mainstreaming biodiversity across their operations. These efforts were guided by the 2021 MDBs Joint Statement on Nature, People, and Planet.
Additionally, the Bank has yet to enhance its system for tracking biodiversity-related finance and the impacts of its projects on ecosystems. In 2023, MDBs released a framework of Common Principles for Tracking nature positive finance, and the World Bank developed a methodology to identify, monitor, and track nature-positive investments that support biodiversity and ecosystem services. However, this methodology still lacks a clear and consistent definition of what qualifies as “nature-positive”, leaving a lot of room for misinterpretation. This ambiguity leads to misdirection in the formulation of strategies, plans, and projects.
Recommendations
(1) – Our inclusion of forests/forestry projects here is to give an idea of the maximum that could be attributed to support of nature, broadly. Unfortunately, we also find examples of World Bank forest projects that support monoculture plantations, such as the Paraguay example cited below.
(2) – The Bank did publish “Investing In Natural Capital For Eradicating Extreme Poverty and Boosting Shared Prosperity: A Biodiversity Roadmap for the WBG,” in June 2014, but this document cannot be fully considered a biodiversity strategic approach.
