MDBs hit record $163B in climate finance for 2025

Multilateral development banks committed a record $163 billion in climate financing in 2025, with funding to low- and middle-income countries jumping 21% to $103 billion, according to a joint annual report released Monday. The milestone arrives just two weeks after the World Bank scrapped its key climate lending targets under pressure from the Trump administration, casting a shadow over future progress.eib+2

Record Commitments Mask Uncertainty

The 2025 figures represent a sharp acceleration from 2024, when MDBs collectively provided $137 billion in climate finance, with $85.1 billion going to low- and middle-income economies. The latest report, published jointly by institutions including the European Investment Bank, the European Bank for Reconstruction and Development, and the Asian Development Bank, shows climate finance to developing countries surpassing $100 billion for the first time.iadb+2

The MDBs had committed at COP29 in late 2024 to scaling up their climate finance to $185 billion annually by 2030. The 2025 results suggest the group is broadly on track to meet that collective pledge.linkedin

World Bank Retreats on Climate Targets

On June 29, the World Bank announced it would "retire" its target of channeling 45% of annual lending to projects with climate co-benefits, as well as an earlier 35% benchmark. The institution framed the move as a shift "from inputs to outcomes to maximize development impact," while extending its broader Climate Change Action Plan indefinitely.france24+3

Reuters Thomson Reuters Corporation ↗ 1.04% reported that the decision came months after criticism from the United States — the bank's largest shareholder — that it should refocus on core economic development. France had made a last-minute appeal urging the bank not to abandon its climate commitments.reuters+1

In 2024, the World Bank had directed $43 billion, or 44% of its lending, to climate-related projects — nearly meeting its own target. The bank said it would continue financing renewable energy, climate-resilient agriculture, and disaster adaptation, but without binding allocation benchmarks.mexicobusiness+1

Growing Gap Between Ambition and Delivery

The World Resources Institute called the decision concerning. "This week, the World Bank Board of Directors decided to drop its goal of having 45% of its investments support climate mitigation and adaptation," WRI said in a statement.wri

The tension between the record MDB numbers and the World Bank's retreat highlights a broader uncertainty in global climate finance architecture. While other development banks continue expanding their commitments, the World Bank — the largest single provider of multilateral development finance — now operates without a quantitative climate target for the first time in years.