Over the last decade, leaders from corporate and international organizations have become accustomed to receiving praise for making bold yet ultimately hollow promises on climate change during high-profile events like those in Davos and climate summits. But the tides are turning. The fear of being criticized by the Trump administration has forced many to shift their rhetoric, if not their actions.
When World Bank President Ajay Banga assumed office in 2023, he expanded the bank’s mission to include not only the eradication of poverty but also addressing climate change, aiming to make the planet more “livable.” In November of that year, as he headed to the COP summit in Azerbaijan, Banga appeared on the cover of Time Magazine’s climate issue, declaring that climate change was “intertwined” with every global challenge. Yet, just a short time later, he stated, “I’m not a climate evangelist,” a shift in tone that raises questions about the sincerity of the World Bank’s climate commitment.
This change in position is superficial unless it leads to meaningful action. The development banks still face enormous challenges in eradicating poverty, and despite their focus on climate initiatives, they continue to allocate significant funds toward projects aimed at reducing emissions among impoverished populations—an issue considering the energy poverty many face. The World Bank and African Development Bank allocate 45% and 55%, respectively, of their annual financing to climate projects. However, much of these funds are directed toward reducing emissions from the very poor, who still lack access to reliable energy.
It is morally and ethically wrong to insist that developing countries rely on intermittent solar and wind energy when wealthy nations have access to abundant and affordable fossil fuels. In fact, Africa has been compelled to establish its own energy bank to finance fossil fuel projects, as Western development banks have refused to invest in such ventures.
Whether the United States will leverage its significant stake in these development banks to prioritize fundamental development needs, rather than grandiose climate rhetoric, remains to be seen.
The development banks could take a cue from corporate America, where parts of the private sector have swiftly abandoned green virtue signaling in favor of refocusing on their core business activities.
While climate change undeniably poses real challenges with far-reaching economic implications, the solutions to it often come with high costs, including reliance on more expensive and less reliable energy sources. Governments, not businesses, should decide how to balance the costs of climate action with the potential benefits.
In the past decade, even some of the largest contributors to climate change, like the fossil fuel industry, have jumped on the green bandwagon. Five years ago, BP made headlines by pledging to cut its oil and gas production by 40% by 2030 while massively increasing its green energy output. But now, like many other major oil companies, BP has walked back those promises and refocused on its core business: fossil fuels.
This shift may be lamented by environmentalists, but in truth, these green promises were always an inefficient and shortsighted strategy. Despite the $14 trillion spent on climate policy, fossil fuels still supply more than four-fifths of global energy, and demand continues to rise. State-owned oil companies in the Middle East have only continued to provide more fossil fuels, while Western firms have scaled back.
Similarly, major banks once embraced climate-focused policies but are now abandoning them. The six largest U.S. banks, for example, have pulled out of the Net-Zero Banking Alliance, and Wells Fargo has officially rescinded its goal of achieving net-zero emissions by 2050 across its financial portfolio.
While some industries are moving faster than others, there are indications that many companies will simply adjust their messaging rather than change their climate policies. A recent global survey found that 58% of companies plan to decrease external communications about their climate efforts, even though many intend to spend more on them. Shareholders must scrutinize what these policies truly achieve for the environment and how they impact the bottom line.
As leaders of international organizations and corporations scramble to adapt to the new climate landscape, they must do more than just change their rhetoric. The era of applauding empty promises is over. Now, it’s time for these leaders to refocus on real, tangible solutions.
