Multilateral development banks committed a record $162.5 billion in climate finance in 2025, marking a significant increase in funding for climate mitigation and adaptation projects.
However, concerns are mounting that the World Bank’s recent decision to abandon a key climate financing target could undermine efforts to support developing countries.
According to a report published by the European Investment Bank on behalf of 10 multilateral development banks, nearly $103 billion of the total climate financing was directed to low and middle-income countries. The lenders said the latest figures keep them on track to meet their collective commitment made at the COP29 climate summit to provide at least $120 billion annually in climate finance to developing economies by 2030.
The report showed that climate adaptation financing rose 31% to $35 billion last year, reflecting growing efforts to help vulnerable countries strengthen resilience against floods, droughts, rising temperatures and other climate-related risks.
Financing for emissions reduction and other mitigation projects reached approximately $68 billion, supporting investments in renewable energy, cleaner transport and sustainable infrastructure.
High-income economies also received increased support, with climate financing approaching $60 billion. In addition, the development banks mobilised about $80 billion in private-sector investment, highlighting efforts to use public funding to attract larger pools of commercial capital into climate-related projects.
Despite the record performance, uncertainty surrounds the outlook after the World Bank last month dropped its target of allocating 45% of its annual financing to climate-related projects. The institution has consistently accounted for nearly half of the climate finance provided to developing countries, making any reduction in its commitments potentially significant for global funding efforts.
The World Bank has maintained that it remains committed to what it describes as “climate-smart development,” arguing that climate considerations will continue to be integrated into projects even without a formal financing target. The lender says its focus remains on helping countries pursue economic growth while strengthening resilience to climate change and managing emissions responsibly.
Climate finance has become a central issue in international development as developing countries seek greater financial support to cope with the effects of climate change while transitioning to cleaner energy systems. Multilateral development banks have increasingly expanded their climate-related lending in response to rising demand and commitments made under successive United Nations climate agreements.
The latest figures will provide momentum ahead of the COP31 climate conference in Turkey, where governments and financial institutions are expected to focus on translating funding commitments into concrete investments. While the record level of climate finance suggests multilateral lenders remain on course to meet their 2030 goals, the World Bank’s policy shift has intensified scrutiny over whether the global climate finance system can sustain the scale of investment needed by the world’s most vulnerable economies.
Stay ahead of the stories shaping our world. Subscribe to Impact Newswire for timely, curated insights on global tech, business, and innovation all in one place.
Dive deeper into the future with the Cause Effect 4.0 Podcast, where we explore the ideas, trends, and technologies driving the global AI conversation.
Got a story to share? Pitch it to us at info@impactnews-wire.com and reach the right audience worldwide
Emmanuel Abara Benson is a business journalist and editor covering artificial intelligence, global markets, and emerging technology.
He has previously worked with Business Insider Africa and Nairametrics, reporting on finance, startups, and innovation.
His work focuses on AI, digital economy, and global tech trends.
Discover more from Impact Newswire
Subscribe to get the latest posts sent to your email.
