The case for investing in climate business has never been stronger.
Already, global markets for climate-smart businesses and technologies have grown to $1 trillion annually. This growth is expected to accelerate, delivering environmental and social benefits while creating value for investors. Analysis by IFC shows that 21 emerging market economies alone hold $23 trillion in climate-smart investment opportunities through 2030. A deep dive into urban investments found that cities across emerging markets could attract more than $29 trillion in green buildings, public transport, electric vehicles, waste management, water treatment and renewable energy.
As the largest development finance institution supporting the private sector in emerging markets, IFC is uniquely positioned to build new markets for climate business. We invest directly in climate-smart sectors, developing new de-risking and aggregation mechanisms, and engaging public and private sector stakeholders through international forums and working groups. In doing so, IFC is mainstreaming climate business in high-growth sectors - opening new markets in key areas such as clean energy, sustainable cities, climate-smart agriculture, energy efficiency, green buildings, and green finance.
IFC does not work alone. We collaborate directly with governments, the private sector, financial institutions, and other development banks. As part of the World Bank Group’s new Climate Change Action Plan, IFC is intensifying its work across sectors and regions. IFC will align 85% of new direct investments with the objectives of the Paris Agreement starting July 1, 2023 (FY24), and 100% of these investments starting July 1, 2025 (FY26). IFC is also developing a methodology in partnership with other MDBs to assess Paris Alignment for investments in financial institutions and funds. From now through fiscal year 2025, IFC will seek to increase its climate finance to 35% on average from our own account, up from 30% in fiscal year 2020, working to create markets and unlock private sector climate investment. We will also expand our work in the following areas: screening investments for climate risk, scaling up private sector climate finance for adaptation, and developing new approaches and business models to expand our biodiversity finance.
Climate Change Action Plan (2021-2025)
The World Bank Group has a new Climate Change Action Plan to guide its work over 5 years. The Action Plan aims to increase climate finance to reduce emissions, strengthen climate change adaptation, and align financial flows with the goals of the Paris Agreement. The private sector and private capital are engines of sustainable development and drivers of the low-carbon transition. How can we tap into the opportunities they offer to support decarbonization and resilience?
From the World Bank
5 Years of Climate Leadership: The World Bank Group’s First Climate Action Plan
The Bank Group's first Climate Change Action Plan (2016-2020) laid out ambitious targets to be met by 2020, including helping client countries add 30 gigawatts of renewable energy, put in place early warning systems for 100 million people, and develop climate-smart agriculture investment plans for at least 40 countries.
The impact of IFC climate business in FY20:
- $6.8 BILLION COMBINED MOBILIZATION AND INVESTMENT
- 8.1MILLION METRIC TONS IN ANNUAL GHG REDUCTIONS
- 111 CLIMATE SMART PROJECTS