Reforming the World Bank to Play a Critical Role in Addressing Climate Change

The current World Bank model focuses on reducing poverty and promoting equitable growth, while considering environmental and social sustainability. Programming of resources is country-driven, and resources are allocated to programs and investments according to priorities of client government authorities. Despite the appeal of this approach and its many benefits, it has left numerous global public goods (GPGs), particularly those related to climate change, underfinanced, undermanaged, and unachieved. The resulting limited levels of investment and programs have significant global cost and, potentially, extreme ramifications. While there has been considerable reflection on the question of mandate, as well as on options for improving financial engineering of the multilateral development banks (MDBs) to increase resources to better address GPGs, there has been little attention given to reforms and changes in the internal business model that would be required at an MDB like the World Bank if it were to implement a new global mission on climate change. This paper examines the changes in the internal business model that would allow the World Bank (or other MDBs) to better address climate change—and, with some adjustments, potentially, other GPGs.