MARK GONGLOFF: The World Bank somehow lost track of at least $24 billion

Imagine if humanity decides it doesn’t have enough amusement parks.

All the world’s nations announce they will be financing new ones across the planet. Bankers stand next to models of future parks and hand comically large loan checks to the developers. It’s not nearly enough to end the global amusement park crisis, but they still win accolades and shareholder approval for doing their part.

But then, years later, we discover some of the proceeds of these loans weren’t spent on amusement parks at all but on whoopee-cushion factories and speedboats. Others did go to amusement parks but were wildly over budget. These supposed answers to our amusement park prayers weren’t quite what they seemed. How could anybody trust amusement park financing again?

This analogy may be working too hard, but it loosely describes an issue with the current state of global climate financing. The World Bank is the planet’s largest public bankroller of projects to help countries fight and adapt to climate change. But its accounting loses track of how its money earmarked for climate delivers tangible results, according to a new report by the nonprofit group Oxfam. The report suggests actual spending on climate projects differed from budgeted amounts, either higher or lower, by 26% to 43% between 2017 and 2023, resulting in an accounting gap of $24 billion to $41 billion.

To put such numbers in context, $41 billion would almost be enough to cover an entire year of World Bank financing; the bank says it delivered about $43 billion in the 2024 fiscal year, which ended on June 30. That was 44% of total multilateral development bank (MDB) financing during the fiscal year. And $41 billion would go a long way toward the $100 billion the world’s richest countries have pledged to spend annually on climate financing in low-income countries.

What could be going wrong here? According to Oxfam, the main issue is that the World Bank accounts for its climate financing at the time of project approval rather than at the time of project completion. Records on what actually gets spent are spotty and inconsistent.

“This is like asking your doctor to assess your diet only by looking at your grocery list, without ever checking what actually ends up in your fridge,” Kate Donald, head of Oxfam International’s office in Washington, said in a press release.

This is important for a bunch of reasons. For one, the World Bank is partially financed by taxpayer dollars from its member countries, the biggest being the US. It would be good to know exactly how the money it lends gets spent. As the biggest MDB, the World Bank also sets the standards for its peers.

What’s more, though the bank’s member countries have vowed to finance the fight against climate change, actually getting money out of them has been harder than getting a live human on a customer service call. It took them years to finally meet their $100 billion climate-finance pledge, the biggest chunk of which came from MDBs like the World Bank.

Even that was woefully inadequate compared with the trillions of dollars most analysts agree is necessary for adaptation and a global clean-energy transition. Hard data on what is actually being spent on such projects would help hold rich nations accountable for matching even their modest claims.

And way too much climate financing ends up getting spent in dubious ways. Gelato shops, hotels, movies and coal plants are among the many projects that have been paid for by bags of money originally labelled “climate finance,” a recent Reuters investigation found. The $116 billion developed countries claim to have delivered in 2022 might be overstated by up to $88 billion, according to Oxfam. That is … a lot of money.

When I asked the World Bank for a response to the Oxfam report, it defended its financing numbers, which are standardized across all MDBs. But it also agreed that project results need more emphasis.

“We are confident in the joint MDB methodology, which is rigorously applied and gives us our annual climate financing totals,” a World Bank representative said in an email. “We also recognise the need to not only focus on dollar inputs but also importantly on outcomes - for instance, how much are we reducing the climate vulnerability of people and communities. That’s a process that we are also jointly driving along with the other MDBs. We also value our ongoing engagements with Oxfam and other civil society groups on our climate work and on pushing us to put out better data and to be more transparent.”

That last sentence probably refers to Oxfam’s previous criticism of the World Bank’s accounting. In 2022, it said it couldn’t verify about 40% of what the bank claimed to have delivered in climate finance in 2020.

It’s long past time to close these huge gaps. Oxfam recommends the World Bank offer detailed accounting for projects both before they begin and after they’re completed, with every report using standardized measures and included in a searchable, downloadable public database. Americans should expect no less as key shareholders of this institution.

The battle to limit global heating to merely disastrous levels has been marked too often by lofty promises and disappointing results. Climate finance is a glaring example, both in quantity and quality. Every moment this is the case makes the long-term economic costs of climate change exponentially higher.

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Mark Gongloff is a Bloomberg Opinion editor and columnist covering climate change. He previously worked for Fortune.com, the Huffington Post and the Wall Street Journal.

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