Institute for Governance & Sustainable Development

World Bank Group President: This Is the Year of Climate Action

January 23, 2014

In corporate boardrooms and the offices of CEOs, climate change is a real and present danger. It threatens to disrupt the water supplies and supply chains of companies as diverse as Coca-Cola and ExxonMobil. Rising sea levels and more intense storms put their infrastructure at risk, and the costs will only get worse.

CEOs know this. They also know there is opportunity in how they respond. But while there are stand-out leaders, many others are holding back until they have more certainty about what governments will do.

This week at the World Economic Forum in Davos, World Bank President Jim Yong Kim called on government leaders to break out of the small steps of business as usual and provide that structure. First, by putting a price on carbon and by having financial regulators require companies and financial institutions to assess their exposure to climate-related risks and disclose it.

Kim also called for doubling the market for green bonds, which support climate adaptation and mitigation projects such as renewable energy, energy efficiency, and carbon reduction, to $20 billion this year and $50 billion by the time a new international climate agreement is reached in Paris in 2015. He urged institutional investors to commit to green bonds targets in their portfolios.

“We have seen great climate leadership from countries and companies, but emissions are still rising, the poor are suffering,” President Kim said. “This is the year to take action on climate change. There are no excuses.”

Rising Costs

The costs of failing to act on climate change are staggering in the lives affected and investments lost.

Globally, weather-related losses and damage have risen from an average of about $50 billion a year in the 1980s to close to $200 billion a year over the last decade, making climate-resilient and disaster-resilient development critical. In the poorest countries, climate change will increase the cost of development by 25 to 30 percent, according to World Bank Group estimates. The impacts could roll back decades of development gains and push millions of people back into poverty within our lifetimes.

“We have to help poorer countries in this transition,” President Kim said. “We have to reduce the risks of low-carbon investments, especially in developing countries, but we can do it – development financial institutions can leverage their capital and use the Green Climate Fund to reduce that risk and catalyze new investment in resilience.”