The World Bank is betting that private sector expertise will help address climate change along with pandemics, poverty and social and political fragility.
Some of the worst effects of climate change are expected to hit developing countries—precisely the ones least able to afford the cost of mitigation and adaptation. A 2021 United Nations report estimates annual adaptation costs in the developing world at $70 billion, quadrupling to $280 billion to $500 billion by 2050.
The World Bank is marshaling some of the private sector’s heaviest hitters to address the problem. Last month, it announced formation of the Private Sector Investment Lab, which is charged with finding solutions that overcome barriers to private-sector investment in emerging markets. The lab will be made up of 15 CEOs and chairs from some of the largest financial institutions, including BlackRock, HSBC, AXA and Temasek.
The World Bank is betting that the executives’ expertise will help it expand its work beyond traditional development projects in emerging markets, to address climate change along with pandemics, poverty and social and political fragility.
Leading the effort will be Shriti Vadera, chair of Prudential plc, and Mark Carney, UN special envoy on climate action and finance, and former governor of the Bank of England.
“It’s encouraging to see that the World Bank wants to make an extra effort to fight climate change by implementing a private-sector led initiative,” says Brunello Rosa, CEO and head of research at UK research firm Rosa & Roubini Associates. “Promoting relevant goals such as poverty reduction, increase of potential growth and ecological transition is of paramount importance. The CEOs will ensure that capital will be allocated efficiently for the achievement of these goals, and the fact that Mark Carney will lead this effort adds further credibility to the project, considering his credentials on this issue.”
The Private Sector Investment Lab will report directly to the new World Bank President Ajay Banga, who took office in June after a decade as CEO and president of Mastercard. The “surest way to drive a nail into the coffin of poverty,” Banga said in a statement, is to unlock investments “that will deliver jobs and better quality of life” for the developing countries. “The Private Investment Lab has the potential to do that.”