The U.S. and Germany want the World Bank to scale up climate finance.


Climate change took center stage at last week’s annual meeting of the International Monetary Fund and World Bank in Washington, DC Demonstrators rallied outside the meetings to demand that the two pre-eminent international financial institutions take urgent action on climate change.

During the meetings, IMF Managing Director Kristalina Georgieva announced the creation of the new Resilience and Sustainability Trust to help the world’s most vulnerable countries tackle long-term challenges like climate change. This comes shortly after World Bank President David Malpass faced calls for his resignation after expressing skepticism about the human causes of global warming.

The World Bank and IMF provide countries with financial support and policy advice to promote development and strengthen economic stability. The annual meetings provide a forum for governments and international financial experts to set the agenda for the coming year. In recent days, for example, the United States and Germany have made a push to change World Bank policymaking to expand climate finance. Existing research suggests that policy changes in international institutions, including tackling climate change, often result from top-down pressure from powerful member states.

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But our new research leads the linchpins of international climate organizations to a surprising and little-studied phenomenon: an internal process of learning and staff rotation that profoundly shapes institutional policy-making.

How can international financial organizations help?

The IMF and World Bank have been criticized for being too slow to take into account the impact of climate change on economic growth and stability. Activists and leaders of developing countries want these institutions to expand their use of soft credit to help decarbonize the global economy and help climate-vulnerable countries adapt to the physical impacts of climate change. And they want greater recognition of the impact of climate change on countries’ ability to repay their debts to lenders.

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World Bank and IMF involvement in climate action has been limited. Developing countries have met resistance within the IMF in their attempts to renegotiate debt burdens that have been exacerbated by climate-related disasters. NGOs have accused the World Bank of pouring billions of dollars into fossil fuel projects since the Paris Agreement was signed in 2015 and of dramatically overstating funding for climate change adaptation and mitigation projects. Barbadian Prime Minister Mia Mottley recently called for a major overhaul of these institutions, stating that they “are no longer serving the purpose in the 21st century that they served in the 20th century”.

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However, we find that these institutions are paying more attention to climate change in other ways. For example, IMF economists regularly dispatch to member countries to help identify risks to economies, with their findings published in IMF reports that shape government policy and access to finance. Our research shows that reports highlighting climate change as an economic threat – including risks to public finances and creditworthiness – have increased dramatically over the past decade.

We identify similar patterns in IMF research papers that influence its policy making. And the creation of the IMF’s Resilience and Sustainability Trust was the result of years of research by the organization’s rank and file. These trends suggest that international financial institutions are increasingly viewing climate change as essential to the economic well-being of member states and hence to the institutional tasks of promoting economic development and stability.

Field workers play an important role

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Existing research typically attributes changes in institutional agendas and policies to the preferences of powerful member nations and institutional leaders. For example, the United States, which holds the most formal power in the World Bank and IMF, regularly changes the policies of those institutions to ease the burden on allies. Much of the concern about Malpass’s comments on climate skepticism stems from the significant influence international finance executives have had on policy and strategy.

Instead, we attribute increased attention to climate to the actions of field workers — the technocrats employed by an international organization who live and work abroad. The process begins when field workers are deployed to highly climate-vulnerable member countries, such as low-lying island nations where climate damage is readily apparent. Often grappling with extreme weather events and climate-related disasters, these countries have become some of the loudest voices calling for international financial institutions to take a more active role on climate issues.

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World Bank and IMF staff stationed in such countries often experience first-hand climate-related disasters and their impact on local economies. This will enable them to understand the importance of climate to their institution’s mandate, particularly the potential of climate-related events to impede economic development and sow financial instability. These technocrats are subsequently more likely to advocate policies aimed at slowing climate change and building resilience to physical climate impacts. As these experts move to other countries or are promoted to new roles, they keep an eye on climate risks to member countries. We show how the processes of staff rotation and promotion—common features of political bureaucracies—have fueled the rapid increase in climate attention at both the IMF and the World Bank.

Employee learning in this area is good news for international financial institutions and their members, as other research confirms. By drawing attention to the immediacy and severity of climate crises in small and often overlooked countries, field agents enable vulnerable developing countries to influence global climate policy outside of traditional negotiating forums such as the UN Framework Convention on Climate Change, where powerful nations are often reluctant to enact ambitious climate policies. Therefore, the rotation of bureaucrats to a number of countries can enhance general well-being – as can the performance of international organizations.

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There is also reason to believe that this on-the-ground work by World Bank and IMF experts on climate issues can drive policy change across a broader range of institutions. The IMF sits at the center of a global web of financial institutions and regulators, including central banks. As a forum for intergovernmental dialogue, the IMF is well placed to work with domestic authorities to help identify climate risks and prepare economies for climate disruption. The World Bank also works closely with domestic institutions in developing countries. A better understanding of the situation in such vulnerable countries can improve the climate-oriented policies of the international financial institutions and help them avoid costly and poorly targeted climate requirements in the developing world.

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Richard Clark (@Ricky__Clark) is an Assistant Professor of Government at Cornell University. His research on international financial institutions has been published in journals such as American Journal of Political Science, Journal of Politics and International organization.

noah sugar (@noahzucker) is a Postdoctoral Research Associate at Princeton University and an Incoming Assistant Professor of International Relations at the London School of Economics. His work has been published in magazines including the Journal of Politics and world politics.


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