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sustainability
The World Bank’s Private Sector Cult Endangers the Planet
Larger Sums, Lagging Standards
From FY2017 to 2023, the IFC trade finance portfolio saw a hefty 86% increase. In FY2023, trade finance amounted to 58% of the IFC’s total portfolio. (Trade finance refers to a range of financial instruments and services designed to facilitate international trade. It provides liquidity and risk mitigation for exporters and importers, enabling transactions that might otherwise not be viable. Instruments such as letters of credit, guarantees, and working capital loans ensure that buyers and sellers can engage in global trade with reduced financial risks.)
The private sector’s profit orientation is incompatible with the World Bank Group’s public service mandate.
While the sums for trade finance are growing exponentially, the checks and norms for their disbursal are stagnating. The environmental and social standards that apply to trade finance have not been updated for at least a decade, and financial flows are shrouded in mystery.
The stated goal of ending poverty on a livable planet presupposes transparency, accountability and sustainability. And yet the meteoric rise of IFC trade finance transactions in recent years comes with opacity, outright unwillingness to disclose basic information about individual transactions, and the long shadow of fossil fuel favoritism.
More Trade Finance for More Fossil Fuels
So, what’s the number? In FY2023, $4.7 billion, or nearly one-third of total IFC trade finance commitments, may have supported fossil fuel-related projects. This figure represents a 28% increase compared to FY2022.
The Global Trade Finance Program (GTFP) alone accounted for $3.7 billion of possible oil and gas-related financing, 41.7% of its total commitments. Transparency issues persist as the IFC fails to disclose detailed information about specific trade transactions and beneficiaries.
The World Bank Group’s own Independent Evaluation Group (IEG) indicates that in the past, significant shares of IFC trade finance investments went into fossil fuel financing, particularly in Africa (50%) and the Middle East (28%).
Money Out the Private Sector Window
The dangerous trend of enabling fossil fuel transactions in fragile countries expands when we look at the IFC Private Sector Window (PSW). It was established in 2017 to encourage private sector investments in high-risk, low-income countries, particularly in IDA-designated regions. The PSW provides risk-sharing mechanisms and facilitates trade finance and other investments that might otherwise be deemed too risky. Between FY2020 and FY2024, $1.03 billion, or about a quarter of PSW approvals, were allocated to trade finance projects. These funds enabled $5.1 billion in trade finance, underscoring the PSW’s leveraged impact.
This fivefold impact, however, remains controversial. Despite its commitment to sustainable development, the PSW lacks exclusion criteria for fossil fuels. Thus, it allows for investments in oil and gas. Transparency remains a significant issue, and information about specific projects and the traded commodities is sparse. PSW-supported trade finance’s environmental and developmental impacts are questionable at best.
Pitting Private Sector Logic Against Public Sector Goals
Many of these problems precede President Banga’s tenure. However, it is vital to highlight and address them now because his laser focus on mobilizing private capital is likely to exacerbate the issues highlighted above. The private sector’s profit orientation is incompatible with the World Bank Group’s public service mandate. The IFC’s growing trade finance portfolio highlights the organization’s critical role in shaping global trade. The significant share of fossil fuel commitments in that portfolio undermines the World Bank Group’s mission of fostering sustainable development.
To align with international climate objectives, the IFC must adopt urgent reforms to enhance transparency; exclude harmful investments; and prioritize clean, fair, decentralized renewable energy—especially in poor and high-risk regions of the world that need them most. To better align the PSW with its mission, the allocation of Private Sector Window funds should prioritize renewable energy and sustainable development projects. Additionally, stringent exclusion criteria and improved reporting standards should ensure greater accountability and alignment with climate and social goals.
These changes are clearly at odds with President Banga’s agenda, and yet only through them can the World Bank Group stay true to its noble goals.
A Citizen’s Executive Order for the Second Trump Era
ESTABLISHING BEST PRACTICES FOR MAINTAINING SANITY AND A SENSE OF INTEGRITY OVER THE COMING YEARS OF THE REPUBLICAN ADMINISTRATION AND BEYOND
WHEREAS, in light of the vindictive tone; short-sighted, self-serving orders; and dangerous, ill-advised decisions expressed by the incoming President, it is essential that there be maintained, to the degree to which I can control, in my own being, household, community, and society, a level of mindfulness, well-being, consideration, kindness, and integrity, enabling behavior and actions in alignment with the highest standards of civil discourse with respect for ourselves, our democracy, human rights, and equitable treatment and opportunity for all those in our country and abroad:
NOW, THEREFORE, by virtue of the authority vested in me as a Thinking Human Being and U.S. Citizen by Birthright, and by the Constitution and the statutes of the United States,
I DECLARE THE FOLLOWING:
1. ANY AND ALL NECESSARY STEPS WILL BE TAKEN with the goal of bending the arc of history toward justice, no matter how slow and painful the process, to address and reproach, immediately and clearly, all who mistreat, emotionally, verbally, or physically, others on the basis of age, racial or gender identity, or sexual preference; and protect those who may be victimized, whether as individuals or on an institutional level, by such behaviors; to speak truth to power by communicating regularly with legislators and executive branch staff and to vote in all elections for candidates who uphold my values; to avoid and discredit unverified news sources; to limit exposure to social media, with immediate and complete withdrawal from negative and innaccurate feeds and posts, while employing it to be a voice for peace, human rights, and environmental sustainability; to consciously reduce energy consumption by employing all available means including bicycling for transportation and by limiting my use of fossil fuels; to actively contribute to the betterment of the local community by volunteering and spreading kindness; and, to avoid partaking in the unnecessary consumer consumption that fuels the country’s wealth gap while directing resources toward just and appropriate uses.
2. OPPORTUNITIES SHALL BE CREATED AND PRIORITIZED for self-care, reflection, and creativity that will allow for physical and emotional health and sustainability over the course of time. These opportunities may include, but are not limited to: processing and releasing feelings appropriately rather than acting on them; taking long walks; enjoying talking with, visiting, and supporting friends and family; eating (limited amounts of) chocolate; making art; caring for and playing with children and animals; actively appreciating and nurturing the earth; and traveling.
This policy dictates that all proposed thoughts and actions be based in nonviolence and respect for all beings, with no requirement for or expectation to respect ideas and policies that are hurtful to others. These actions shall go into effect immediately, with due regard for the urgent nature of the matter, and the necessary time and energy required to maintain a sense of humor and maintain morale.
ADDENDUM: In the future, I shall refer to my high school alma mater (McKinley High School) as Denali High School and the wetland next to my trailer park as The Gulf of Justice.
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