Two Decades after the Rio Earth Summit: Sustainable Development Quo Vadis?

Abstract

The world’s most influential development agency, the World Bank Group (WBG), is the leading actor in development finance and plays a central role in global efforts to protect the environment. Following the Rio Earth Summit in 1992, the institution was responsible for all investment projects of the Global Environment Facility (GEF), which was then newly established to serve as the interim financial mechanism for the United Nations Conventions on Climate Change and Biodiversity. The promise that the GEF would lead to the “greening” of development finance remains largely unfulfilled. More recently the United Nations Framework Convention on Climate Change appointed the WBG as the interim trustee of the new Green Climate Fund which plans to mobilize an estimated US$ 100 billion per year by 2020. While the World Bank Group plays this critical role in global environmental efforts, its main business continues to be lending for development. This includes the financing of large-scale infrastructure projects, agribusiness, large dams as well as investments in gas, oil and mining. This regular lending portfolio for development is often at odds with environmental sustainability. For example, despite the growing area of climate finance, support for fossil fuel projects continues to be dominant in the institution’s lending for the energy sector. Another climate-related area is the World Bank’s pioneering role in advancing REDD+, an initiative designed to reduce the emission of global green house gases by integrating efforts to protect forest areas into global carbon markets. Ultimately, its success will depend on addressing sensitive questions such as land ownership, forest governance and the equitable sharing of benefits. In conclusion the paper considers the underlying corporate culture and the difficulties in reconciling environmental and social sustainability with the institution’s supply-side driven focus on meeting lending targets.