Trump's Victory Forces World Bank to Retreat on Climate Mission

The return of Donald Trump to the White House has altered the direction of the World Bank. Under pressure from the United States, the institution has scrapped its climate financing target and begun shifting its focus from green agendas towards the economic development of poor countries.

In June 2023, the mood in Paris felt like a turning point for the World Bank. Before world leaders, President Ajay Banga announced a plan to allocate a significant portion of the institution’s financing to climate-related projects and their impacts. The room rose for a standing ovation. French President Emmanuel Macron welcomed the move. Ethiopian Prime Minister Abiy Ahmed even stopped Banga backstage just to take a selfie.

Three years later, the atmosphere has completely changed.

The World Bank has officially dropped the target that required 45% of its financing to be allocated to climate projects. The target was removed last month after pressure from the United States, which, since Donald Trump’s return to the White House in 2025, has pushed the institution to refocus on its development agenda. The decision ends one of the most significant shifts in the World Bank’s recent history. Climate issues, once a top priority, no longer have a specific target in loan allocations. This does not mean the World Bank will stop financing green projects, but the obligation to allocate a specific portion of funds to them is gone.

The debate had been ongoing long before the target was scrapped. Some parties viewed climate financing as part of poverty reduction efforts, with funds used for various projects such as renewable energy, electric vehicles, mangrove restoration, and climate change adaptation. Others saw different priorities. They argued that when development budgets are limited, funds should be directed towards needs with a more immediate impact on communities, such as hospitals, schools, roads, and basic infrastructure. Ajay Banga repeatedly stressed that development and climate action need not be in conflict. In his view, projects that lift people out of poverty can simultaneously strengthen resilience to climate change. However, many developing countries did not fully agree. If development and climate always go hand in hand, they asked, why does climate financing need its own quota?

The debate sharpened as funding sources began to shrink. Throughout 2024, the World Bank nearly met its target by channelling US$43 billion, or about 44% of its total annual lending, to climate-related projects. Yet, at the same time, many developed countries started cutting their development aid budgets. Contributions to the World Bank practically stopped growing in real terms, while financing needs continued to rise. This is where the problem lies. When the total funds do not increase, any additional financing for one sector means less room for others.

The change in direction became apparent after Donald Trump returned to the White House in 2025. In October of that year, US Treasury Secretary Scott Bessent stated that the World Bank’s focus on the climate agenda was diverting attention from its core task of helping poor countries grow. He also hinted that American support could be affected if the direction did not change. The statement was hard to ignore, as the United States is the World Bank’s largest shareholder and holds the greatest influence over its policies. By April 2026, officials from the US Treasury Department began pushing for the removal of the climate financing target. Ajay Banga’s various efforts to maintain relations with the Trump administration ultimately could not stem the change.

Several European countries tried to preserve the climate financing target, but their position weakened. The Iran war brought energy security concerns back to the forefront, while net-zero commitments that could potentially raise energy prices became increasingly difficult to sustain politically in many nations. Support for the climate target eroded as government priorities shifted.

Developing countries still need roads, ports, power grids, schools, and hospitals to pursue economic growth. At the same time, they are being urged to accelerate decarbonisation and invest in more environmentally friendly projects. The more limited the funding sources, the harder it becomes to meet both goals simultaneously. The debate over the World Bank was never really about the 45% figure. When development money is scarce, the real question is who gets to decide which needs must come first.