Development Banks Reach Record High in Climate Finance, World Bank Signals Withdrawal

1. Development banks have once again demonstrated the scale of their financing for projects aimed at combating climate change. In 2023, the climate-focused loans and grants provided by these banks increased significantly compared to previous years, setting a new record in the sector. 2. Total climate finance exceeded the 2022 level of $12.5 billion, rising to $15.3 billion in 2023. This increase reflects the growth in investments in sustainable infrastructure, clean energy, and low-carbon technologies. The role of development banks in this area is emerging as a critical factor in achieving global climate goals. 3. However, the World Bank's upcoming budget plan is expected to include a decrease in climate finance expenditures. The bank forecasts a 10% decline in planned climate loans for 2024. This could create an imbalance in the support development banks provide to climate projects and generate uncertainty in the markets. 4. Investors and policymakers should consider the contribution of development banks' increase in climate finance to sustainability goals, as well as the World Bank's potential withdrawal strategy. These developments could reshape the impact of climate risks on the financial system. This is not an investment advice.