World Bank Climate Change

Building Resilience in Europe and Central Asia: A Smart Investment for Growth and Jobs

Sameh Wahba, Thomas Farole, Julie Rozenberg, Julian Lee — Thu, 14 May 2026 00:00:00 +0000

The data is clear: Investments in adaptation and resilience deliver high economic returns but remain insufficient and poorly targeted. Evidence shows that targeted, early investments in resilient infrastructure, climate-smart agriculture, and early warning systems can deliver strong economic and social returns and reduce losses, even under uncertain futures.

However, adaptation finance in Europe and Central Asia is the lowest among all regions as a share of GDP, despite being the world's fastest-warming continent. In 2025, floods, droughts, and heatwaves cut an estimated US$50 billion from that year’s EU output. By 2029, the longer-term effects are projected to reach US$147 billion, with some countries facing losses approaching 3% of their gross value added.

How countries prepare makes a decisive difference. In Poland, years of investment in flood defenses and early warning systems shielded millions from the worst impacts when, in 2024, Storm Boris killed dozens and caused billions in damages across Central and Eastern Europe. This reflects a broader pattern: countries that invest in resilience before shocks fare better.

A new World Bank report, Building Resilience and Climate Adaptation in Europe and Central Asia, takes stock of where the region stands, what the business case for adaptation is, and what it would take to close the adaptation gap. The findings, compiling evidence from the World Bank Group’s Country Climate and Development Reports, are instructive.

The potential impact of smart investments is considerable. Across the region, World Bank modeling suggests that adaptation and resilience investments equivalent to approximately 1.7% of GDP through 2030 would offset, on average, more than one-third of projected climate-induced economic losses. At the project level, the public investment case for adaptation is also compelling, with most adaptation investments yielding benefits outweighing costs by a factor of 2-10, and some substantially higher. The cost of inaction is also significant. Without adequate adaptation, the short-term losses outlined above propagate into the long-term, leading to annual losses across ECA reaching nearly 6% of GDP by 2050. The transport sector, for example, already sustains damage from hotter temperatures and increasing instances of extreme weather at roughly three times the rate of other regions. For firms, a single-unit rise in temperature variability (that is, larger swings around normal seasonal patterns) is associated with a 9% drop in sales on average.

Across the region, extreme weather events are a direct threat to the jobs and livelihoods that underpin household welfare and economic stability. More than one in three people across ECA live in areas of high exposure to such risks, and substantially more in Bosnia and Herzegovina, Croatia, Moldova, and Romania. Poverty is the single largest driver, accounting for roughly 40% of households' exposure across the region, rising 70%-90% in some countries. In Moldova, where agriculture supports more than 30% of all jobs, a single drought in 2020 pushed rural poverty up by more than 8 percentage points. In Tajikistan, continued inaction could push an additional 100,000 people into poverty by 2030.

Despite this evidence, Europe and Central Asia significantly under invests in adaptation. The best available data suggests that ECA received just US$3 billion in adaptation finance in 2023. This is the lowest share relative to its economy of any region, and well below the estimated annual needs, which could reach US$20 billion. Private finance, although probably underreported, accounts for barely 2% of that total.

While adaptation is often seen as a government responsibility, resilience is fundamentally built through private decisions by households and firms. But these need to be enabled by the right public information, incentives, and finance.

To close the adaptation gap and accelerate progress, the report identifies five areas where policy can make the biggest difference, including putting private actors in a position to adapt:

Accelerate income growth and close gaps in inclusion: Economic development remains the most powerful tool for building resilience. By focusing on inclusive growth, countries can empower households and firms to invest in their own protection and diversify their economies away from climate-sensitive sectors.
Improve access to information and finance: Governments, firms, and households need reliable climate data and risk information to make informed decisions. Expanding access to finance, especially for the most vulnerable, is crucial for unlocking private investment in adaptation.
Strengthen safety nets and insurance: Adaptive social protection systems and well-functioning insurance markets are essential to protect people and businesses from the financial fallout of increasingly extreme weather shocks, reducing the burden on public finances.
Build resilient infrastructure: Upgrading legacy infrastructure to withstand future climate impacts, mainstreaming adaptation standards in new investments, and promoting sustainable land and water management will reduce exposure and enhance resilience across sectors.
Establish robust macro-fiscal and financial sector policies: Governments must integrate climate risks into fiscal planning, strengthen public investment management, and create enabling environments for private sector participation in adaptation.

Addressing these priorities is not a radical departure from standard development practice – it extends what governments in the region already do. The adjustment required is to adopt a clearer view of how a changing climate alters the risk environment. Countries that make that shift stand to protect not only their populations, but also the jobs, investments, and fiscal positions on which their development depends. The World Bank Group's work in Europe and Central Asia is increasingly helping countries make exactly that adjustment. The returns are proven and the approach is known; what’s needed now is sequenced execution.

Brewing Carbon Credits Like a Barista: Mobilizing Development Finance Through Carbon Markets

Olivier Mahul, Luis Tineo — Wed, 29 Apr 2026 00:00:00 +0000

In the fast-paced world of climate finance, crafting a high-integrity carbon credit mirrors the skillful work of a barista preparing the perfect espresso. It takes premium beans, the right brewing equipment, and a barista with a discerning touch, blending flavors into a cup that customers worldwide can trust and savor. Each element carefully measured to create sustainable jobs and improve livelihoods on a livable planet.

For years, the World Bank Group (WBG) played a central role in carbon market development: designing crediting methodologies, structuring carbon programs and supporting countries to generate and issue high-integrity carbon credits to be purchased by its carbon funds like the Forest Carbon Partnership Facility (FCPF), BioCarbon Fund Initiative for Sustainable Forest Landscapes (ISFL), Transformative Carbon Asset Facility (TCAF), and Carbon Initiative for Development (Ci-Dev). Today, the WBG is evolving its role in the carbon value chain, working alongside countries as they take the lead in generating high-integrity credits and connecting them to carbon markets that can command premium value.

Carbon Market Infrastructure: Barista’s Brew Station

Every skilled barista needs a top-notch coffee shop to guarantee consistency and quality. In the carbon market, this “shop” is carbon market infrastructure, the digital espresso machines and point-of-sale systems that ensure credits are brewed, tracked, verified, and traded without risk of serving the same cup twice.

The WBG helps develop the carbon market’s “coffee shop” digital infrastructure to boost transparency and lower costs. At the heart of this effort is the Climate Action Data Trust (CADT), an independent, digital infrastructure connecting registries created with the Government of Singapore and IETA. CADT currently collects information across twelve registries, covering roughly 95% of total market volume, providing the transparency needed to build global buyer confidence.

One of these registries is the Carbon Assets Tracking System (CATS), the WBG’s secure, web-based “bean tracker” for monitoring Emission Reduction (ER) units issued by its programs. Its main goals are preventing double counting, selling, or claiming, ensuring data integrity, and promoting transparency through stakeholder involvement. To date, CATS has supported ER issuances and transactions for countries including Mozambique, Costa Rica, Côte d'Ivoire, Ghana, Vietnam, Madagascar, Lao PDR, and Uzbekistan, transacting a cumulative volume of over 132 million ER units equivalent to approximately US $660 million, making it the most significant transaction platform for jurisdictional REDD+ globally.

Business-Enabling Policies: Pricing the Cup

Even the finest espresso needs discerning drinkers willing to pay for quality. In carbon markets, that starts with pricing. The WBG, through its Partnership for Market Implementation (PMI), aims to advance carbon pricing. It works across the market ecosystem to strengthen the frameworks that underpin demand and to ensure that client countries can participate in shaping them. This includes supporting the development of international rules such as Article 6 under the Paris Agreement and engaging with initiatives like the Coalition to Grow Carbon Markets to strengthen high integrity corporate demand. PMI also supports major emitting economies such as China, Brazil, South Africa, India, Mexico, Thailand, and Türkiye in developing and implementing carbon pricing instruments such as emissions trading systems and carbon taxes. As highlighted in the World Bank’s State and Trends of Carbon Pricing, these instruments now cover roughly 28 percent of global emissions and continue to expand.

Private Capital Mobilization: Packaging and Serving for Global Reach

The final step for a barista is making sure their coffee reaches as many customers as possible at the highest value. Public funds alone can’t fill every mug; mobilizing private capital is essential to turn growth into jobs and local opportunity.

The WBG is developing sophisticated financial "packaging" solutions to de-risk investments for private players, including carbon price guarantee and first loss cover. Through its Scaling Climate Action by Lowering Emissions (SCALE) fund, we aim to mobilize large-scale, private sector carbon finance for countries. SCALE provides technical assistance and de-risking instruments to help countries generate and monetize high-integrity carbon programs. By offering predictable funding streams and focusing on high-integrity credits, SCALE helps unlock investment, catalyze climate-smart policies, and accelerate the transition to low-carbon development pathways for client countries. In addition to traditional guarantees, the WBG is testing innovative solutions like carbon guarantee solutions, which aims to provide price floor guarantees to protect sellers in emerging markets from market volatility.

Real-world examples show how these blends are making it to market. The recent approval by the International Civil Aviation Organization of the Forest Carbon Partnership Facility (FCPF) and BioCarbon Fund Initiative for Sustainable Forest Landscapes (ISFL) standards for Phase 1 of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) opens new doors for countries with qualifying credits brewed under these programs to mobilize added resources. Ethiopia is set to become the first WBG-supported country to supply credits to the CORSIA market. In 2025, Côte d’Ivoire finished a $23 million transaction with a private buyer for credits from its forest carbon program. Also in 2025, Costa Rica sold 100,000 forest carbon credits, releasing them from an old contract when a new buyer offered $13 per ton, over double the original price.

The Perfect Brew for a Livable Planet

Like a skilled barista assembling a perfect blend, high-integrity carbon credits draw on three essential ingredients: strong infrastructure to streamline the brewing process, business-enabling policies to price the cup, and private capital mobilization to package and serve for global reach, including local communities. Well-designed carbon credits are the rich aroma that opens new paths and revenue, fueling progress toward a world free of poverty. Though the brew is still steeping and the taste evolving, the goal is clear: to foster a carbon marketplace where integrity is the main ingredient and climate-smart development benefits all.

Building the Market for Resilience: A New Opportunity for Financial Institutions

Thomas Kerr, Stéphane Hallegatte — Mon, 06 Apr 2026 00:00:00 +0000

Insured losses from natural catastrophes again surpassed $100 billion for the sixth consecutive year. For banks in emerging markets, climate impacts are increasingly becoming part of their business reality, as they see an increase in loan defaults from flood-hit farmers, collateral stripped of value by repeated storms, and uninsured small businesses.

For too long, climate adaptation has been framed as primarily a responsibility of governments. That obscures a larger truth: private companies are already investing in resilience to protect assets, maintain productivity, and secure competitiveness. As governments adopt clearer resilience policies and incentives, financial institutions are uniquely positioned to significantly scale these efforts—turning climate resilience into a new class of investable opportunity.

Businesses are already demonstrating what works

Many companies are investing in adaptation and resilience without labeling it as such. These measures often appear as efficiency improvements, supply chain management, or sustainability initiatives—and their impact is significant. Toyota, for instance, overhauled its supplier network and risk management systems after the 1995 Kobe earthquake and 1997 Aisin Seiki fire, building a resilient supply chain that has since become a competitive advantage.

As businesses adapt to a changing climate, markets for resilience solutions are projected to grow by up to 15% annually. In India, farmers are adopting heat-resistant crops and bio-stimulants to withstand erratic rainfall. In Singapore, climate-intelligence firms provide advanced hazard modeling and catastrophe risk analytics for cities and insurers. And in the Philippines, IFC’s Building Resilience Index is applying web-based hazard mapping and resilience assessment for buildings. These solutions are generating impact and measurable financial returns as they reduce downtime, exploit efficiencies, and reduce insurance premiums.

The finance sector's pivotal role

Despite growing momentum, adaptation and resilience remain under-recognized by many financiers. This is a missed opportunity, given that the sector’s core strengths are exactly what is needed to scale investment. Financial institutions can integrate physical climate risk into credit and investment decisions, deploy capital through mainstream debt and equity products, and design innovative instruments such as contingent finance and resilience bonds to grow their business. Resilience investments also protect asset values and stabilize portfolios. By reducing physical risk exposure, lenders can safeguard collateral, improve borrower performance, and enhance long-term returns—a virtuous cycle benefitting both clients and financiers.

Frameworks such as the Climate Bonds Initiative’s Resilience Taxonomy are making adaptation investment actionable by helping investors identify assets and assess outcomes. Banks are beginning to put this into practice. In South Africa, FirstRand Bank is working with IFC to integrate resilience into its agricultural lending by geo-mapping its portfolio against long-term climate data and assessing climate-smart technologies across key value chains. These insights will help the bank find commercially viable opportunities to finance agribusinesses with stronger climate resilience. FirstRand is not alone: last year, Standard Chartered provided guarantees to facilitate the delivery of storm and extreme-weather resilient solar modules from corporate client in high-risk regions.

Government action helping to create new openings

Across emerging markets, countries are signaling where they are ready to partner with private capital by issuing National Adaptation Plans (NAPs) along with incentives and climate impact data systems. To date, 64 countries have developed NAPs, which create predictable policy environments that lead to pipelines of investable projects.

India is a case in point. In one of the world’s most climate-vulnerable countries, three signals are converging: the country’s first National Adaptation Plan is expected to be released soon; the Reserve Bank of India's climate-risk requirements will make physical risk a core balance-sheet concern for banks; and an emerging Climate Finance Taxonomy will help define what credibly qualifies as an adaptation investment.

To translate these policies into investment by Indian financial institutions and their clients, three steps are needed: establishing shared definitions and screening tools so banks can consistently identify adaptation-eligible investments; documenting the monetary benefits that flow from investments in adaptation and resilience; and building bank capacity to structure, originate, and aggregate resilience investments into financeable portfolios.

The business case is already being written

This convergence of policy signals, banking-sector appetite, and practical market-building work is common across emerging markets — from Southeast Asia to Sub-Saharan Africa — wherever NAPs, regulatory frameworks, and financial sector capacity are being developed in parallel. As governments put in place the right set of policies, private capital will follow: by 2030, corporate investment in resilience may create a $130 billion annual financing opportunity for banks. Early movers are poised to capture a financing pool that will grow far faster than traditional credit lines. The question is no longer whether private capital will flow into resilience, it’s which institutions will lead.

From Ecosystems to Employment: How Investing in Nature is a Job Creator

Ebad Ebadi, Richard Damania — Tue, 24 Mar 2026 00:00:00 +0000

Jobs and the environment are deeply interconnected. The environment shapes livelihoods, productivity, and economic transformation. Labor markets determine how societies adapt to environmental conditions. Jobs are also central to prosperity and poverty reduction, providing income, hope, and dignity.

However, over the next 10 to 15 years, about 1.2 billion young people in developing countries will reach working age, while only around 400 million jobs are expected to be created. Compounding the jobs gap further, are environmental pressures that are already weighing heavily on livelihoods and economic potential. In many developing countries, degraded air, water, and land reduce productivity and limit opportunities for workers and businesses alike.

Seeing the Wood and the Trees: Environment and Jobs at Scale

Investing in nature can be one of the fastest ways to protect livelihoods, raise productivity, and create jobs. Natural resources and ecosystems underpin many productive sectors, from agriculture and fisheries to tourism and renewable energy.

Reorienting development around a livable planet is therefore not only possible, it is the smarter economic choice. Transitioning to cleaner and more restorative economic activities can generate new opportunities and strong returns. In fact, investments in less polluting sectors often create more jobs per dollar invested than investments in more polluting industries. Healthy soils, fisheries, forests, and ecosystems sustain livelihoods across agriculture, fishing, and tourism.

Source: Chapter 9 of the Reboot Development: The Economics of a Livable Planet.

Here is a snapshot of the job-generating potential across environmental ecosystem:

The agrifood system alone employs about one third of the global workforce, with 3.2 billion people relying on food systems for their livelihoods. In low income countries, agriculture still accounts for nearly two thirds of all jobs.
Nature based sectors support millions of workers. Fisheries and aquaculture directly employ 62 million jobs and support the livelihoods of over 500 million worldwide. Forest related activities provide jobs for 33 million people each year. Investments in nature protection can also generate strong economic returns.
Every dollar invested in protected areas and nature based tourism can return at least six dollars. In Zambia, two national parks alone support more than 35,000 jobs, while tourism sustains 30 percent of the working age population near South Luangwa National Park.
Water dependent sectors such as agriculture, energy, and industry support about 1.7 billion jobs worldwide. When water systems fail, livelihoods suffer. During the 2018 drought in Cape Town, for example, water shortages caused the loss of livelihoods for 20,000 agricultural workers. Strengthening water security and expanding access to clean water can therefore protect livelihoods while supporting economic growth.

Environmental Degradation is a Job Killer

While environmental systems support jobs, their degradation can also undermine them when pollution and climate shocks damage workers’ health and productivity. Pollution quietly erodes economic performance. Dirty air and water reduce worker productivity and earnings in both outdoor and indoor jobs. Pollution also affects cognition, decision making, and overall output. The damage begins early and accumulates over time. Exposure during pregnancy and early childhood can weaken human capital, lower educational attainment, and reduce lifetime earnings.

Climate shocks disrupt work more directly. Floods, droughts, and extreme heat shut down businesses and keep workers from showing up. Productivity falls when weather becomes more extreme. Climate impacts could lead to the loss of the equivalent of 260 million jobs by 2050 across low- and middle-income countries.

At the same time, adapting to climate change can create new employment opportunities. In 49 countries studied, climate adaptation investments could generate the equivalent of 25 million jobs by 2050. Across all low- and middle-income countries, this could reach 149 million jobs.

The message is clear. Growth that damages the environment also damages productivity, employment prospects and long term prosperity.

A Jobs-First Approach for Environmental Policy: Invest, Train, and Protect

A clear and practical set of policy actions can help decision-makers boost employment while also managing environmental resources. Three foundational principles apply:

First Invest Wisely: Investing in less polluting and nature-based sectors is a smart choice, generating more jobs per dollar than investments in higher polluting sectors. Forestry, fisheries, and agriculture all show strong employment multipliers across countries. Sustainable land use can also deliver lasting economic returns, not just a short-term stimulus.

Second Build Skills for a Changing Economy: Most green jobs rely on strong foundational, technical, and basic digital skills. Some roles will require targeted training rather than entirely new degrees. Roofers can become solar installers within weeks, and mechanics can learn energy efficient repair techniques with short courses. The challenge is scale. Training systems are not expanding fast enough to meet demand.

Third Protect Displaced Workers: As employment patterns shift, policymakers will need to put in place active labor market policies such as job matching and retraining, alongside income support like unemployment benefits and temporary cash transfers. Social protection systems can also help vulnerable households cope with changes.

Jobs and the environment are inseparable. The shift to a cleaner and more resilient economy can create jobs at scale, but only if countries invest in the right sectors, build the right skills, and protect vulnerable communities. If we get it right, our natural wealth could sustain livelihoods for millions.

Five Lessons on Creating Jobs and Building Resilience through Local Initiatives

Jana Elhorr, Janna Tenzing, Macarena Martin Segurado, Nicole Southard — Tue, 17 Mar 2026 00:00:00 +0000

Investments in climate resilience could add the equivalent of 150 million jobs in low-and middle-income countries by 2050. These investments encompass critical initiatives like upgrading infrastructure to withstand extreme weather, developing early warning systems, and restoring degraded lands through drought-resistant farming. Investing in climate resilience is not just good for the planet, it directly benefits job creation and unlocks economic growth.

Capturing this opportunity effectively often involves bringing finance and decision-making authority directly to affected communities. By empowering communities to lead local development processes through control over planning decisions, fund management, and project implementation, greater institutional capacity is built at a local level to better manage investments over time. This is what locally led climate action is designed to do by adapting the proven logic of Community and Local Development (CLD) approaches to the climate context.

Here are five lessons that have emerged from the World Bank’s engagements with community leaders from across the globe.

Lesson 1: Public-private partnerships unlock market access and keep value local

Experiences shared during the exchange illustrated how community institutions can structure credible partnerships with the private sector to generate local growth. In Tugu Utara, a village-owned enterprise manages formal agreements with coffee buyers and eco-tourism operators, generating revenue that is redistributed through transparent profit-sharing and reinvested in landscape stewardship. In the Solomon Islands, the Rural Development Program's agribusiness-farmer partnership increased product sales by 51% and raised farmer incomes by 56% among participating households. Strong community institutions reduce risk for private partners, aggregate local supply and demand, and keep economic gains anchored in the community rather than extracted from it.

Lesson 2: Community-owned risk assessments are what connect climate finance to the right problems

Across every case examined, programs were most effective when communities identified and prioritized their own climate risks before any investment decisions were made. This helps ensure money reaches the right problems rather than the most visible ones. In Guinea, a structured participatory planning approach anchors development plans across 362 communes, giving local leaders a shared framework for turning climate risk into investment priorities. In Madagascar, embedding this same process into local governance structures helped 121 communes create integrated development plans, coordinate early warning systems, and channel livelihoods support—such as credit access, value chain development, and agricultural inputs—to more than 73,400 people. By aligning risk assessments with market opportunities, these investments diversified crops, raised household incomes, and created more resilient local jobs through stronger value chains and microenterprise growth. The transferable lesson: a minimum package of locally owned risk tools, explicitly linked to budgeting and investment selection, provides the foundation for more effective and context-appropriate action.

Lesson 3: Performance-linked finance accelerates resilience

Knowing which communities face the greatest climate risks is only useful if that knowledge shapes how money flows. Indonesia has built a system that does exactly this. By classifying the climate vulnerability of all villages and linking risk tiers directly to Village Fund allocations and performance incentives, the government is using data to directly inform budgets. Kenya's Financing Locally Led Climate Action program similarly offers performance-based grants to reward counties that meet spending, citizen engagement, and climate risk assessment targets. These investments increasingly translate into tangible jobs—such as in catchment restoration, resilient agriculture, and renewable energy—while also boosting household livelihoods by improving productivity, reducing climate losses, and opening new market opportunities, to date benefitting over 1.1 million people.

Lesson 4: Local institutions are the most durable delivery systems for resilient livelihoods

While resilient infrastructure is critical, lasting climate adaptation grows out of strong local institutions, effective governance, and community trust that guide and sustain investments. In the Kyrgyz Republic, a village investment program built over more than a decade reached over one million people and helped thousands of women generate new income through beekeeping, fruit processing, and ecotourism enterprises. In Zambia's Barotse Sub-basin, grants channeled through community structures enabled farmers to cultivate drought-resistant crops, invest in solar-powered water systems, and rehabilitate canals, with nearly all beneficiary households reporting new income sources as a result. When embedded in national systems, these locally led platforms deliver a genuine double dividend: climate resilience and greater economic opportunity.

Lesson 5: Government-to-government learning turns good programs into scalable systems

One of the most underutilized assets in international development is the knowledge that governments accumulate from experience. Structured exchanges create the conditions for this knowledge to travel. Critically, these engagements build networks of officials who can turn shared insights into concrete policy and implementation commitments, and who create the enabling conditions to crowd in both public and private action around solutions with demonstrated traction. Sustaining this learning requires converting insights into training and technical tools, while deepening cross‑country collaboration on climate‑risk‑informed investment, anticipatory action, and performance‑linked financing. A single learning event is a starting point; the goal is a system.

A prerequisite, not a complement

Experience from community-driven climate action shows that in vulnerable communities, locally led investments in resilience are among the most direct pathways to more and better jobs. They protect existing productive capacity, while generating new jobs and market opportunities in growing sectors such as energy, agriculture, and tourism. Getting this right, at scale and rooted in community ownership, is what makes everything else possible.

The World Bank’s Locally Led Climate Action Platform provides a space for knowledge exchange and learning on key topics related to strengthening socio-economic resilience to climate risks. Through this platform, the team convenes dialogues, supports locally led initiatives, and promotes collaborative learning on the critical role that citizen engagement, public-private partnerships, and local institutions play in building resilience for all. A recent example is the Global Knowledge Exchange on Community-Driven Development Approaches for Resilience, where in January 2026, delegations from 13 countries gathered in Jakarta, Indonesia to examine the evidence and identify what it takes to scale these approaches.

We would like to hear from you! What has your experience shown about the conditions that allow LLCA to generate lasting economic opportunity—and where do the biggest barriers lie?

Closing the Loop

Charlotte Doyle — Fri, 11 Jul 2025 00:00:00 +0000

IFC has committed more than $1 billion to circular economy projects across emerging markets

Today’s global challenges—poverty, fragility, climate change, and biodiversity loss—require more than incremental solutions. They demand smarter models of economic growth. The circular economy offers just that: a multi-trillion-dollar opportunity to build resilience, create jobs, and boost innovation, while helping to protect our environment.

This means shifting from the linear model of “take-make-waste” to the circular economy, which reduces waste, reuses materials, and restores natural systems. To date, IFC has committed more than $1 billion to circular economy-related projects across emerging markets and across the entire product lifecycle—supporting companies that are turning waste into opportunity and designing smarter, more resource-efficient systems.

This strategy is delivering notable results. In Brazil, a recent $130 million investment in Magalu—one of the country’s largest retailers—will help increase e-waste recycling fivefold while supporting the company’s e-commerce growth. In Türkiye, IFC financed a new textile recycling facility in an earthquake-affected region, supporting job creation and reuse of 200,000 tons of waste annually. In Ghana, support to Rider Steel enabled the company to use scrap materials, reducing emissions and import dependence. In India, IFC is supporting Attero Recycling to scale up its e-waste processing capacity and promote safe, responsible recycling.

Circular business models are not only helping reduce waste—they’re opening new markets, improving business resilience, and creating local jobs. There is momentum across sectors, from textiles to electronics to agribusiness.

Aligning the Market around Circularity

While momentum builds, clarity and consistency remain a critical challenge in scaling investment. Definitions vary, investment data is limited, and many clients still only associate circularity with recycling.

Uncertainty around labeling and definitions remains one of the biggest barriers preventing financial institutions from investing in circular solutions. To unlock private capital at scale, identifying circularity investment opportunities help give private sector investors the clarity they need to act.

To help address this, IFC and partners launched the Harmonized Circular Economy Finance Guidelines at the World Circular Economy Forum in São Paulo, Brazil in May 2025. The Guidelines provide a shared foundation to identify circular investments and align reporting. They outline definitions, eligibility criteria, and metrics that enable private investors to spot and quantify opportunities across the circular value chain: with (1) circular design and production, (2) circular use, and (3) value recovery, along with circularity enablers that cut across the three categories.

By providing a clear framework and definitions for circular finance, the Guidelines help pave the way for greater private investment in circular solutions.

Enabling the Shift: Policy and Partnerships

Unlocking private capital at scale will require coordinated action. Public and private stakeholders must work together to align incentives, unlock capital, and ensure a just transition.

Policy will play a catalytic role in scaling circular solutions—by addressing bankability challenges, supporting infrastructure, and encouraging innovation. Tools like Extended Producer Responsibility (EPR) and recycled content mandates can help mobilize capital and create predictable demand.

Well-designed EPR policies can be game changers, sending clear signals that reduce risk and unlock private investment in circular infrastructure, especially in emerging markets.

To deepen the conversation on this topic, the World Bank, IFC, and UNITAR recently co-hosted a high-level event on Extended Producer Responsibility and the private sector, bringing together voices from policy, business, and finance to explore enabling policy environments for circularity.

IFC is supporting efforts in markets like Côte d’Ivoire to bring together public and private sector actors to develop effective policies that will unlock investment.

As Jamie Fergusson, IFC’s Global Director for Climate Business, puts it: the circular economy isn’t just good for the planet—it is a smart strategy for development. IFC is proud to be building the financial infrastructure that will help grow the market.

Cooler Finance: The Business Case for Sustainable Cooling

Rusmir Music, Camilo Mondragon-Velez — Tue, 03 Jun 2025 00:00:00 +0000

Rising temperatures are threatening lives and economies worldwide. Heat-related deaths are nearing half a million annually, and productivity losses exceed $2 trillion. Access to cooling solutions that help people and businesses adapt to changing weather is more critical than ever. Yet only 15 percent of 3.5 billion people who live in hot climates - most of them in developing countries – have access to cooling. This lack of cold storage and refrigeration also hampers the preservation of life-saving medicines and contributes to the loss of approximately one-third of all food produced.

Expanding access to cooling is essential, but it must be done sustainably.

Conventional cooling methods are a major contributor to global greenhouse gas (GHG) emissions, consuming 20% of electricity globally. With demand for cooling solutions expected to triple by 2050, this will lead to even higher emissions.

In fact, the Global Cooling Watch 2023 report found that left unchecked, cooling-related emissions could double by 2050 to reach 6.1 billion tons of carbon dioxide equivalent (CO₂e), most of them in developing countries. Emerging economies generate about two thirds of global cooling-related emissions and without further action this share could increase to 80 percent by 2050.

That’s where sustainable cooling comes in. These approaches are increasingly seen as the best way to help people and products adapt to rising temperatures while minimizing the impact on the planet. Some of them rely on energy efficiency, while others use insulation, shading, reflectivity, or innovative technologies like district or biomass cooling.

Source: Cooler Finance: Mobilizing Investment for the Developing World’s Sustainable Cooling Needs. UNEP and IFC. 2024, p. 47.

New Research Lays out a Business Case for Sustainable Cooling

The sustainable cooling sector is primed for growth. The new report Cooler Finance: Mobilizing Investment for the Developing World’s Sustainable Cooling Needs, found that today, the cooling market in developing economies is approximately $300 billion and is expected to grow to at least $600 billion by 2050.

The report also found that adopting sustainable cooling in developing economies could result in over $8 trillion in avoided costs by 2050 through lower electricity bills and reduced power infrastructure investments.

Supportive Policies Can Help Catalyze Private Investment

Most of the capital needed for scaling up sustainable cooling will need to come from the private sector. With projected market demand of at least $600 billion by 2050, governments and regulators have a critical role to play in making sustainable cooling in developing economies more attractive to private investors – with policies like minimum energy performance standards and new building codes, systems approaches to supply chains, incentives to promote innovation, and the adoption of nature-based solutions for outdoor heat reduction.

A Track Record of Supporting Innovation

Sustainable cooling is an important area of growth for IFC. Its new Sustainable Cooling Initiative aims to scale up financing and technical assistance through its “five by five” sustainable cooling plan, which addresses five cooling intensive sectors through five modes of engagement:

Source: Cooler Finance: Mobilizing Investment for the Developing World’s Sustainable Cooling Needs. UNEP and IFC. 2024, p. 33.

The Initiative builds on two existing programs also supported by the government of the United Kingdom: the TechEmerge Program, which connects innovators worldwide to companies in emerging markets, and the EDGE Green Buildings Market Transformation Program. TechEmerge, which wrapped up in September 2024, matched high-potential cooling innovators with corporates and field-tested cooling solutions across ten developing countries. And IFC’s successful EDGE Green Buildings Program, which has certified over 100 million square meters of green construction, includes cooling as part of its advisory and investment activities.

 A Global Effort Gathering Steam

In 2019, the Cool Coalition was launched, bringing together over 130 members to collaborate on science, policy, finance, and technology to address the growing demands for sustainable cooling . In 2023 the Global Cooling Pledge was introduced with ambitious goals: to reduce global cooling-related emissions by 68 percent by 2050, improve energy efficiency of cooling technologies by 50 percent by 2030, and to increase access to sustainable cooling for the most vulnerable.

With institutional support from governments and multilateral institutions, and smart policies to encourage private investment, sustainable cooling can help address the growing needs for cooling across developing countries without overheating the planet.

Rising to the Challenge: Boosting Adaptation and Resilience for Development

Jia Li, Stéphane Hallegatte, Esther Naikal, Jia Jun Lee — Thu, 17 Jul 2025 00:00:00 +0000

One in five people globally are at high risk from climate-related hazards—not just because they’re exposed to floods, heatwaves, cyclones, or droughts, but because poverty or limited access to essential services like clean water, electricity, social protection or financial services leaves them more vulnerable. But here’s the good news: the share of people at high risk from climate-related hazards has halved globally within a decade—from 2010 to 2021, demonstrating global progress and illustrating the benefits of development for resilience.

In South Asia, for example, the drop is largely thanks to reductions in poverty and better access to financial services, electricity, and education. Our analysis shows that a 10% increase in income could reduce the global population at high risk from climate hazards by almost 100 million people. In short, development can significantly strengthen people’s ability to cope with and recover from shocks.

Figure 1: Share of population at high risk from climate-related hazards, 2010-21

Source: WBG Scorecard data on percentage of people at high risk from climate-related hazards (https://scorecard.worldbank.org); Hill et al. (forthcoming).

But development alone isn’t enough, especially in the face of increasing risks—from rising temperatures to more frequent and more intense disasters. As highlighted in the World Bank’s Rising to the Challenge report, building resilience requires a three-pronged approach: faster development, more resilient development, and targeted adaptation efforts.

This means building the right policies and systems and ensuring both public decisions and private investments take current and future climate risks into account.

Well-designed adaptation measures already show what’s possible. During the 2024 flood in Poland, a dry dam installed for flood control protected cities along the Odra River, helping safeguard more than 2.5 million people. But not every country has the same resources or readiness. To help close the gap, the World Bank has assessed adaptation and resilience readiness in 45 countries —using our Adaptation Principles framework to pinpoint where progress is underway and where support is still needed.

Figure 2: Summary of country adaptation and resilience performance across six key pillars

Source: World Bank country A&R readiness assessments. See details here.

Note: Each indicator is scored 1 (nascent), 2 (emerging), and 3 (established) based on data, expert input, and comparisons with peer countries. The figure shows each country’s average score by pillar (dots), the overall average across countries (cross), and the middle range of scores (25th to 75th percentile) as the shaded box.

These assessments surface critical gaps and identify priorities, alongside proven successes and practical lessons that countries can replicate and scale.

Climate data and early warnings: High-quality, publicly available data on climate change and hazard risks are crucial. While many countries have improved hydromet capacity, most still lack localized, high-resolution data for effective planning. Successful interventions in many countries can be replicated. For instance, in Bangladesh, better localized hydromet information has reduced crop losses by up to 75 percent.

Resilient infrastructure and planning: Building resilient infrastructure makes economic sense. Yet, many countries still rely on outdated building codes and land use plans that don’t reflect climate risks, even as cities rapidly expand to flood-prone areas. In the Pacific Island countries, a regional transport program is introducing planning that incorporates climate risks, nature-based solutions, and technical reforms which has reduced maintenance costs by 20% and disaster recovery costs by 75%.

Risk management and social protection: Some countries still lack national strategies for managing climate disaster risks. But targeted programs are making a difference. In Niger, an adaptive social protection system that responds early to drought improved food security by 8% and household consumption by 18%. In the Horn of Africa, a drought response program has helped 1.5 million pastoralists access financial services like insurance.

Macroeconomic resilience: This remains a major gap as few countries are addressing climate-related fiscal and financial risks. However, some are leading the way. The Philippines has implemented a disaster risk finance strategy, layering financial instruments to improve preparedness. Colombia has also established a strong institutional framework, including climate risk stress tests for its financial system.

Institutional coordination and local action: Even where strategies exist, implementation often falls short, with weak coordination and execution across sectors. Vanuatu offers a model—allocating 15% of its budget to resilience and strengthening local governance to deliver risk-informed services that meet community needs.

When countries build strong systems, communities are better protected, businesses can adapt, and governments can make smarter, faster decisions. These country assessments offer a roadmap for action. For policymakers, it’s about setting clear priorities, guiding investments, and about tracking progress, and aligning efforts with the Global Goal on Adaptation.

For communities, it’s about building resilience where it matters most.

For all of us, it’s about rising to the challenge—so we’re ready not just for the next crisis but also laying the foundation for a more resilient and inclusive future.