Tag: Bank

The World Bank boss — who was appointed by former President Donald Trump — had come under fire after an interview last year in which he seemed to cast doubt on climate change science. His departure opens the door for the Biden administration to pick his replacement. The U.S. has traditionally selected the head of the bank, although that may be contested by other governments.

“The next few months will provide a good opportunity for a smooth leadership transition,” Malpass said Wednesday.

Malpass confirmed his departure in a tweet. The World Bank put out a release announcing Malpass was stepping down and listed the bank’s accomplishments under his tenure.

In the email to staff, Malpass praised World Bank employees for their efforts in buffering developing countries from a series of global shocks, namely “the Covid-19 pandemic, war in Ukraine, sharp global economic slowdown, unsustainable debt burdens, climate change, and food, fertilizer, and energy shortages.”

Potential successors for Malpass have been circulating for months, following scrutiny in climate circles for a reputation of not doing enough to steer development dollars away from fossil fuels and toward clean energy.

U.S. special climate envoy John Kerry, former Vice President Al Gore and former New York City Mayor Michael Bloomberg are some of the more familiar names. Others include Minouche Shafik, who recently accepted a job to become Columbia University’s president; Daleep Singh, who was deputy national security adviser for international economics in President Joe Biden’s White House; World Trade Organization Director-General Ngozi Okonjo-Iweala; and former U.S. Agency for International Development Administrator Raj Shah, who now leads the Rockefeller Foundation.

The environmental community criticism peaked last September when Malpass publicly demurred about the role humans play in driving temperatures higher, largely by burning fossil fuels.

Malpass later backtracked on those public comments, including with emails to staff.

While the World Bank has declined to officially rule out financing fossil fuels, its backing for such projects has slowed.

The organization has said its International Bank for Reconstruction and Development and International Development Association did not invest in new fossil fuel finance in fiscal year 2021 and that the group has not financed upstream oil and gas projects since 2019.

The bank has defended its record on climate finance under Malpass, noting it devoted a record $32 billion to the sector last year to best all other multilateral institutions combined.

But the bank nonetheless faced charges that it was not moving fast enough and that its design precluded major greenhouse gas-emitting nations from accessing cheap finance to fund their transitions off fossil fuels.

The bank’s role over natural gas had increasingly become the target of geopolitical tussling. Gas-rich African nations have prodded the World Bank to ease finance for developing the fuel as European nations flocked to the continent to replace Russian gas ditched after the Ukraine invasion.

“We welcome the departure of a climate and development laggard as the head of a critical international finance institution,” said Jake Schmidt, senior strategic director of international climate at the Natural Resources Defense Council. “We need World Bank leadership committed to bold action to unleash more and better climate finance to meet the scale of the climate crisis and the needs of developing countries.”

The World Bank and other international development institutions have come under fire as not being fit for purpose to address global crises like climate change. Global leaders like Barbados Prime Minister Mia Mottley, French President Emmanuel Macron and U.S. Treasury Secretary Janet Yellen have called on the banks to overhaul their processes to tackle emerging challenges.

Yellen on Wednesday praised Malpass for steering the bank through multiple crises, including Ukraine, climate change and food supplies.

“[W]hile we all must continue to raise our collective ambitions in the fight against climate change, during President Malpass’ tenure the World Bank has made important recent advances in this area,” Yellen said in a statement.

U.S. Special Climate Envoy John Kerry has also pushed the bank to increase its lending for clean energy and called for the World Bank and other multilateral institutions to deliver a plan to enhance their role in fighting climate change by April.

The exit of Malpass comes as Indian Prime Minister Narendra Modi angles to use his new G-20 chairmanship to address the multilateral development bank system. India and other nations are concerned about debt distress amid rising food and energy prices, which serves as a launchpad for discussions for changing banks’ practice to help lessen debt burdens.

In the climate change context, environmental advocates have floated allowing middle-income countries currently shut out of receiving below-market-rate loans to access cheaper finance to fuel clean energy installations. Many of those middle-income countries are projected to contribute a large chunk of the world’s future heat-trapping emissions.

Yellen has supported an “evolution” of the World Bank and other multilateral development banks to better address challenges that cross borders, such as climate change, pandemics and conflict.

“The MDBs’ core model involves countries borrowing to make specific investments aimed at addressing development constraints in their own countries. That model is insufficient to meet the moment,” Yellen said in a speech earlier this month. “Such a model will always underinvest in addressing global challenges — since the benefits of investments in global challenges stretch far beyond the borders of the country where a given project takes place.”

Adam Behsudi contributed to this report.