In the past decade, leaders of companies and international organizations have become accustomed to being praised for making big, but ultimately empty, green promises on the stages of Davos and climate summits. How quickly things have changed! The fear of being held accountable by the Trump administration is forcing many leaders to change course, at least in their rhetoric.
The green goals of the World Bank
When World Bank President Ajay Banga took the helm of the institution in 2023, his first move was to expand its mission from fighting poverty to integrating climate change and creating a “livable” planet. Last November, as he headed to the COP in Azerbaijan, Banga appeared on the cover of Time’s climate issue to warn that climate change is “intertwined” with every challenge. Yet today, somewhat surprisingly, he tells journalists, “I am not a climate evangelist.”
However, self-identification change is frankly useless without a deeper change. Development banks still have a lot of work to do to end poverty. Surprisingly, the World Bank and the African Development Bank respectively allocate 45% and 55% of their annual funding to climate projects. Both institutions divert half or more of these climate funds to projects that reduce emissions from poor people, an absurdity considering that energy poverty remains a huge obstacle to development.
Will Trump settle for a green language change?
It is hypocritical and ultimately immoral to insist that the poorest countries rely on intermittent solar and wind energy, when every single wealthy country has access to a large amount of affordable and reliable energy, mainly from fossil fuels. In fact, Africa has been forced to establish its own energy bank to finance fossil fuel projects because major development banks refuse to invest in them.
It remains to be seen whether the United States will use its significant stakes in the World Bank and the African Development Bank to encourage a return to less flashy development bases, or if the Trump administration will settle for a simple change in language.
Development banks could take a cue from American companies. Parts of the private sector have ruthlessly moved away from green virtue signaling and returned to their core business.
Climate change is a problem, green policies are not the solution
Climate change is undeniably a real problem with tangible economic impacts. However, climate solutions also have their costs, often forcing companies and individuals to rely on more expensive and less reliable energy sources. The decision to balance the expenses of climate policies with the benefits of climate action rightly falls under the responsibility of governments, not profit-oriented businesses.
Yet, over the past decade, even major contributors to climate change, such as the fossil fuel industry itself, have invested in extraordinary green policies. Five years ago, BP made the surprising promise to reduce its oil and gas production by 40% by 2030, while increasing green energy production twentyfold and achieving net zero emissions. Now, along with other major Western oil companies, it has abandoned those farcical green promises and has committed again to its core business: fossil fuels.
Green promises do not save the planet
Undoubtedly, this change in direction will be criticized by environmental activists. But the truth is that these promises have always been an inefficient way to help the planet and very shortsighted for fossil fuel producers. Even after the world has spent $14 trillion on climate policies, over four-fifths of global energy is still supplied by fossil fuels.
Over the last half-century, energy from fossil fuels has more than doubled, with 2023 setting a new record. Consumers and businesses are clamoring for more energy, while competing state-owned oil companies in the Middle East have continued to supply more fossil fuels. It is an absurd energy society that declares it will provide less energy.
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Even banks have had a fling with green policies, but now the six largest US banks have abandoned the Net-Zero Banking Alliance, and Wells Fargo has officially dropped its goal of achieving net zero emissions across its financial portfolio by 2050.
Changing language is not enough, concrete actions are needed
While some sectors are moving faster than others, there are signs that many companies will simply change their language, not their inefficient climate policies. A recent global survey of 1,400 business executives found that 58% of companies “are deliberately planning to reduce the level of external communication” on climate policies, although most intend to invest more in them than before. Shareholders must ask tough questions about what these policies actually do for the planet and how they contribute to profits.
As leaders of international organizations and companies scramble to adapt to a completely new world, it is important that they go beyond simple rhetorical changes. The era of being applauded for every environmental promise and commitment, no matter how ridiculous or counterproductive, is over. Now is the time for these leaders to get back to work.
