Record climate finance should be a source of encouragement. According to the European Investment Bank, the world's multilateral development banks (MDBs) committed an unprecedented $162.5 billion in climate finance in 2024, with nearly $103 billion directed to developing countries. Yet, these headline grabbing figures mask growing doubts over whether such financial commitments can be sustained and even if the current global financial system can deliver a truly just transition.
The World Bank, the largest provider of MDB climate finance for developing countries, seems to have abandoned its target of allocating 45% of its annual lending to climate-related projects, arguing that it would instead prioritise broader development objectives. Since the World Bank accounts for nearly half of MDB climate finance for developing economies, this decision raises legitimate questions about whether recent momentum can be sustained. Meanwhile, climate impacts continue to accelerate.
Devastating floods, prolonged droughts, extreme heatwaves and increasingly destructive storms are already undermining economic growth, food security, public health, and political stability across much of the developing world. MDBs increasingly portray themselves as leaders of the green transition, yet many financed fossil-fuel infrastructure, carbon intensive industries and environmentally damaging development projects for decades. Coal-fired power plants, oil and gas projects, major highways and extractive industries have all benefited from multilateral lending.
Climate finance should therefore be viewed not simply as generosity, but as part of a broader institutional responsibility to help address the consequences of past development models. Encouragingly, climate finance is paying greater attention to adaptation. While mitigation projects received roughly $68 billion, adaptation financing rose by 31% to $35 billion in 2024.
This reflects a welcome recognition that reducing future emissions is no longer sufficient. Countries must also strengthen infrastructure, agriculture, water systems, disaster preparedness and public health against climate impacts that are already unavoidable. Even so, current commitments remain far below what is required.
Independent estimates suggest MDBs may need to provide around $180 billion annually by 2030 to adequately support developing countries, significantly abo…
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