As climate change leads to a seemingly endless stream of weather disasters around the world, countries are struggling to adapt to the new reality. Preparing to better withstand hurricanes, floods, heat waves, droughts and wildfires will take hundreds of billions of dollars. And then there is confronting the root cause of climate change—the burning of fossil fuels like coal, gasoline and oil—by transitioning to clean energies like wind and solar.
That will take trillions of dollars. Enter climate finance, a general term that means different things to different people but boils down to: paying for projects to adapt to and combat the cause of climate change. Financing related to climate change is especially important for developing countries, which don’t have the same resources or access to credit that rich countries do.
International mega banks, funded by taxpayer dollars, are the biggest, fastest-growing source of climate finance for the developing world. Called multilateral development banks because they get contributions from various countries, there are only a handful of these banks in the world, the World Bank the largest among them. How these banks allocate resources are some of the weightiest decisions made in defining how poorer nations can respond to climate change.
They were a key reason why, in 2022, the world met a goal countries had set in 2009 to supply developing nations with $100 billion annually to address climate change. At the annual U.N.
climate confer.