Because America beats on the World Bank. Report Ft

by Redazione Start Magazine

The U.S. Treasury Department criticizes the World Bank for its inaction on climate change. The financial times' in-depth analysis

The world bank Group's top brass is facing renewed criticism from Joe Biden's administration for stepping up its efforts on climate change, after a harsh denunciation by the US Treasury for failing to take the required level of action. Writes the Financial Times.

A letter to the international financial institution led by Donald Trump-appointed David Malpass, seen by the Financial Times, says that progress has been made to meet Treasury Secretary Janet Yellen's demands, but that "specific gaps and room for greater climate ambition" remain.

The letter also called for "stronger and more constructive leadership." A U.S. Treasury official said that while "appreciating" the steps taken by the World Bank in 2021, it had "continued to clarify" its position regarding the bank's shortcomings in climate ambitions.

The United States is the largest shareholder of the World Bank Group and the only member nation that has veto rights over some changes in the bank's structure.

The bank provides loans and grants to poorer countries and is considered crucial for distributing money to developing countries to help limit global warming as these economies grow.

But it has been increasingly criticized by the United Nations and climate experts for not aligning its financing activities with the Paris Agreement's ideal goal of keeping global warming at 1.5°C since 1800.

The U.S. Treasury's letter to world bank leaders included a number of demands to avoid financing fossil fuel-related projects, particularly to help developing countries abandon coal.

The World Bank has chosen not to join the many countries and development banks that pledged at last year's UN COP26 summit to end public funding for coal, oil and gas internationally in 2022, and the group's climate plan does not include a deadline to phase out direct and indirect fossil fuel financing.

The letter also called for the institution to "support gas investments only under limited circumstances" and in the absence of "other credible options."

According to a person familiar with the meetings, Treasury officials also clarified, during meetings with civil society organizations, their dissatisfaction with the climate policies of multilateral development banks, and in particular the World Bank.

In an email sent to several nonprofits, a Treasury official said the department has "pressured the [World Bank]'s management to be more ambitious and proactive in a number of areas," such as "exercising greater [climate] leadership" and the clean energy transition.

Under Malpass, the bank's commitment to tackling climate change was criticized by UN Special Adviser Selwin Hart, who at COP26 criticized it for being "a continuing failure." Former U.S. Vice President and climate expert Al Gore described the bank as "missing in action."

According to people familiar with the talks, the financial institution pushed to shorten and weaken the joint statement of development banks at COP26.

According to its critics, the bank's bureaucracy has also made it difficult for developing countries to access finance related to climate change.

The US Treasury letter asks the bank to "significantly increase" the funds available for climate adaptation and resilience. In addition, he called on the bank to set "clear, specific and ambitious" targets for mobilising financing in the climate sector.

Yellen summoned the heads of other multilateral development banks in 2021 to discuss their climate ambitions, a Treasury official said.

Egypt's finance minister recently told the FT that he believes multilateral development banks, such as the World Bank, "do not provide sufficient support on climate change and financing".

"I would like to see better conditions and lower costs," said Mohamed Maait. Conditions such as the obligation for beneficiaries to monitor and report extensively on the use of money create a substantial burden for countries with limited resources, he added.

In response to the U.S. Treasury letter, the World Bank Group said it was "committed to helping countries achieve the goals of the Paris Agreement" and that it had "stepped up our [climate] financing."

"We will continue to work with client countries and international partners to support the transition to low-carbon and resilient growth, particularly for the poorest and most vulnerable countries," the group said.

(Excerpt from the press review of eprcomunicazione).

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