By Siena Cicarelli, Erin Sikorsky and Michael Werz
Every year, leaders of the International Monetary Fund (IMF) and World Bank – as well as key stakeholders from civil society, the private sector and regional financial bodies – gather to assess the landscape of international development finance. This year, they will do so against the backdrop of a complex geopolitical landscape, where one of the most consequential election years in human history, continued conflict in Ukraine and Gaza, and increasingly frequent extreme weather events have divided multilateral bodies and strained the funding landscape.
While this year’s agenda will cover everything from water security to streamlining taxation, one key challenge will dominate discussions: the staggering costs of the green transition and how these relatively inflexible financial institutions can evolve to support global climate adaptation, mitigation and resilience building – particularly in fragile, conflict-affected and violent situations (FCV). As seen at 28th UN climate conference (COP28) and the 2024 World Bank Fragility Forum, most stakeholders recognize that existing efforts are falling short and are eager to move from admiring the problem to identifying tangible steps and best practices needed to address this challenge.
The gap in climate finance has implications beyond sustainable development and humanitarian need. Further, investments in climate adaptation and resilience are essential for addressing the security implications of climate change, helping reduce risks and vulnerabilities, and helping build more stable and secure societies. For example, investing in climate-resilient agriculture supports food security, but can also alleviate the irregular migration, political instability, and potential for recruitment by non-state actors that can occur in the wake of a climate shock.
With these interrelated risks in mind, this year’s “Spring Meetings” of the IMF and World Bank should serve as an inflection point for international financial institutions (IFIs), multilateral development banks (MDBs) and other multilateral stakeholders alike: failing to replace outdated processes, improve access to finance for climate-vulnerable nations, and prove that investing in fragile contexts can work will leave those most at risk trapped in interrelated crises and threaten global stability.
Recommendations for the path forward include:
- Reforming the international financial architecture to relieve the burden on FCV states.
- Mobilizing the private sector, developing strategies for managing risk, and adjusting the bias away from mitigation finance.
- Identifying successful interventions, particularly in FCV settings.
- Improving existing programs and leveraging areas of agreement.
