Finance
Multilateral banks are key to financing the fight against global warming. Here is how they work
As climate change leads to a seemingly endless stream of weather disasters around the world, countries are struggling to adapt to the new reality. Preparing to better withstand hurricanes, floods, heat waves, droughts and wildfires will take hundreds of billions of dollars.
And then there is confronting the root cause of climate change—the burning of fossil fuels like coal, gasoline and oil—by transitioning to clean energies like wind and solar.
That will take trillions of dollars.
Enter climate finance, a general term that means different things to different people but boils down to: paying for projects to adapt to and combat the cause of climate change. Financing related to climate change is especially important for developing countries, which don’t have the same resources or access to credit that rich countries do.
International mega banks, funded by taxpayer dollars, are the biggest, fastest-growing source of climate finance for the developing world. Called multilateral development banks because they get contributions from various countries, there are only a handful of these banks in the world, the World Bank the largest among them.
How these banks allocate resources are some of the weightiest decisions made in defining how poorer nations can respond to climate change. They were a key reason why, in 2022, the world met a goal countries had set in 2009 to supply developing nations with $100 billion annually to address climate change.
At the annual U.N. climate conference that opens Monday in Azerbaijan, global leaders are expected to discuss how to generate trillions of dollars for climate finance in the years to come. The nonprofit research group Climate Policy Initiative estimates the world needs about five times the current annual amount of climate financing to limit warming to 1.5 C (2.7 degrees F) since the late 1800s. Currently, global average temperatures are about 1.3 C (2.3 degrees F) higher.
A new goal needs to reach higher and hold institutions and governments accountable to their promises, said Tim Hirschel-Burns, an expert at Boston University’s Global Development Policy Center.
“The core of it is getting a goal that is going to catalyze the actions that fills the really significant climate finance gap that developing countries face, which is much bigger than $100 billion,” he said.
As the international community has come to accept the reality of climate change, the debate has shifted to the question of where the money to fund the energy transition will come from, said Dharshan Wignarajah, director of Climate Policy Initiative’s London-based office.
“The question is not ‘are we going to transition?’, but ‘how quickly can we engineer the transition?’” said Wignarajah, who helped lead the climate talks, called the Conference of Parties, when the United Kingdom was host in 2021. “That has forced finance to be ever-more prominent at the COP discussions, because ultimately it comes down to who pays.”
FILE – People examine the damage at an area badly affected by a flash flood in Tanah Datar, West Sumatra, Indonesia, May 13, 2024. (AP Photo/Ali Nayaka, File)
Developing countries most dependent on multilateral banks
Developing nations are much more reliant on these banks for financing climate projects than industrialized countries.
In the U.S. and Canada, commercial banks and corporations provided funding for more than half of climate-friendly projects in 2022, according to Climate Policy Initiative. In sub-Saharan Africa, those private lenders only accounted for 7%.
This is because it is harder for developing countries to get low interest rates.
“If you’re Kenya, and you want to borrow from private lenders, they might charge you 10% interest rates because your credit rating isn’t very good,” Hirschel-Burns said.
But the multilateral banks have better credit ratings than many countries do. For example, the International Development Association — an arm of the World Bank and the top international aid provider to Kenya — has the highest possible rating from Moody’s Investor Service, while Kenya itself has a junk rating.
The banks borrow money with that better rating, then lend to developing countries in turn, offering a more reasonable rate than governments could get if they borrowed directly from private lenders.
Some bank projects work against climate goals
The multilateral banks’ development goals are wide-ranging. They seek to improve people’s health and the environment, expand energy access and end poverty. Addressing energy access has meant the banks have provided billions of dollars for fossil fuel power plants, according to an AP analysis, though their policies have improved and fewer such projects have been funded in recent years.
Investment in fossil fuels continues to rise worldwide, reaching $1.1 trillion in 2024, according to the International Energy Agency. And multilateral banks continue to rank among the biggest funders of fossil fuel-prolonging projects, helping to “lock in a high-carbon pathway” for countries, according to a report by the Clean Air Fund, which lobbies for the funding of projects to improve air quality.
“This is development aid we’re talking about, and it should be assisting countries to leapfrog,” said Jane Burston, CEO of the Clean Air Fund, referring to the idea that developing countries could industrialize with renewable energies and skip over development that rich nations historically made with fossil fuels.
“It’s baffling why development assistance is being given to something that continues to make people unhealthy as well as harms the planet,” she added.
FILE – James Tshuma, a farmer in Mangwe district in southwestern Zimbabwe, stands in the middle of his dried up crop field amid a drought, in Zimbabwe, March, 22, 2024. (AP Photo/Tsvangirayi Mukwazhi, File)
Seemingly contradictory actions can be seen in a loan made by an arm of the World Bank, the International Bank for Reconstruction and Development. It loaned $105 million toward rehabilitating coal plants in India, with their last loans toward the project going out in 2018, according to an Associated Press analysis of data from the Organization for Economic Cooperation and Development.
Coal spews carbon pollution, contributing to climate change and creating breathing problems for people who are exposed. However, the improvements made coal plants more efficient and reduced their greenhouse gas emissions, according to project documents.
The Clean Air Fund’s report estimated the World Bank provided $2.7 billion in “fossil fuel prolonging finance” between 2018 and 2022. During that time, the bank also loaned about 32 times the amount for renewables as they did for non-renewables in India, including $120 million for rooftop solar.
“Renewable energy support is always our first choice as we work to provide access to electricity to the nearly 700 million people who still cannot power their homes, schools, hospitals, and businesses,” a World Bank spokesperson said in a statement.
The bank’s policies still “selectively support natural gas as a transition fuel” if its research shows the project is low risk to the climate, the spokesperson said. The bank’s recent policies require rigorous vetting for every project to make sure its investments reduce climate impacts.
The World Bank delivered $42.6 billion in climate finance in its most recent fiscal year, a 10% increase from the year before. And at the most recent COP, the bank promised nearly half of its lending will soon go toward climate finance.
In Vietnam, about half of power generation comes from fossil fuels, primarily coal power. The Asian Development Bank loaned about $900 million on coal in Vietnam, with their spending on the fossil fuel in the country ending in 2017. The bank’s updated climate policies “will not support coal mining, processing, storage, and transportation, nor any new coal-fired power generation,” the bank said in a statement. The bank put $9.8 billion toward climate finance in 2023, and aims to finance $100 billion in climate-friendly projects between 2019 and 2030.
The country’s biggest growth area for energy is in wind. The Global Energy Monitor ranks Vietnam seventh in the world in planned wind power. And the Asian Development Bank committed about $60 million in loans toward wind energy in Vietnam between 2021 and 2022.
FILE – Residents rescue kittens from the roof of a flooded home in Cobija, Bolivia, Feb. 28, 2024. (AP Photo/Juan Karita, File)
The banks have made broad commitments in recent years to align with the landmark 2015 Paris Agreement. But those promises leave pathways open to continue funding fossil fuels, said Bronwen Tucker, global public finance co-manager at Oil Change International.
According to the green group’s monitoring of the banks’ commitments, all nine of the major banks tracked can fund gas projects in at least some cases. Rich countries should step in and fill the trillions of dollars in need for climate action with donations to less developed countries “to avoid climate breakdown and save lives,” Tucker said.
“The MDBs can’t be climate bankers if they are still fossil bankers,” she said. “Relying on banks that are locking in fossil fuels and the worst-ever debt crisis is not working.”
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The Associated Press’ climate and environmental coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.
Before seeking a new referendum MPS needs to rebuild trust in the community through completing state audits, putting in place controls to prevent overspending and routine reports to the public.
For MPS Superintendent Brenda Cassellius, who just wrapped up her first year leading Milwaukee’s public school system, her tenure has been punctuated by some very big numbers.
The first is $252 million. That is the amount of new spending voters narrowly approved in an April 2024 referendum to support operations in Wisconsin’s largest school district. Just months later, MPS was rocked by revelations the district was months behind in filing key financial reports to the state, which led to former Superintendent Keith Posley’s resignation.
The second is $1 billion. MPS faces a deferred maintenance backlog exceeding $1 billion. The district’s enrollment has declined 30% over the last 30 years, leaving many schools at less than 50% full. That, in part, is driving a plan to close some schools and to improve others to help lower costs.
The final is $46 million, the deficit MPS was running for the 2024-25 school year, an unexpected shortfall which has led to hundreds of staff layoffs.
Getting the district’s accounting, budgeting and financial reporting back on track has dominated Cassellius’s first year at MPS. In an April 15 interview with the Journal Sentinel’s editorial board, she talked in detail about the challenges putting that into order and progress she sees in restoring transparency into its operations.
State funding and aging buildings create budget nightmares
Cassellius says state needs to keep up its share of school funding
In an interview with the Journal Sentinel editorial board, MPS leader Brenda Cassellius says budgets and buildings are her two top worries.
Cassellius said the on-going budget crisis is her top concern. She said the state’s failure to live up to its share of funding is exacerbating MPS’ budget woes. A group of school districts, teachers and parents filed suit against the state Legislature and its Joint Finance Committee claiming the current state funding system is unconstitutional and prevents schools from meeting students’ educational needs.
Funding for special education is especially critical. About 20% of MPS students have disabilities, almost twice the share of the city’s charter schools, and the average of 14% across Wisconsin.
“What’s keeping me up now, you know, is really just the budget crisis we’re in, with not only this year but multiple years going out without additional state aid, we’ve been not getting funding for what our needs are for our students, and particularly our students with special needs,” she said.
Although the state budget increased special education funding to a 42% reimbursement rate, the actual rate has been about 35%. Another component to the budget headache is the age of MPS buildings. The average age is 85 years-old compared to 45 across the nation.
“We have just kicked this can down the curb or kicked it down the street or whatever you call it for too long. And it’s time that we really take on a serious conversation about the conditions of the learning environments in which we send our children,” she said. “Particularly in Milwaukee Public Schools, we serve the most vulnerable children. Children who have language barriers, children who have disabilities, children in high-concentrated poverty.”
What needs to happen before MPS seeks another referendum
Voters need to be comfortable MPS has made tough budget decisions
In an interview with Journal Sentinel editorial board, Brenda Cassellius said voters will need to see budget improvements before seeking more spending
Cassellius said MPS will definitely need to go back to voters for a new referendum in the future. In addition to the 2024 measure, voters approved an $87 million plan in 2020.
Before doing that, she said the district first needs to rebuild trust in the community through completing required state audits, putting into place controls to prevent overspending and routine reports to the school board and public about finances.
“I don’t think that the voters are going to want us to bring something forward until they feel comfortable that we have done the cleanup that is necessary,” she said. “And we’ve built the trust that we have the sufficient controls in place.”
In the interim, she’s hoping the state will meet its constitutional responsibility to adequately fund public schools.
“What the public expects is you know where the money is, you’re spending it as close as you can to children, you’re getting good on the promise around art, music, and PE, and the things the public said they wanted to fund,” Cassellius said. “And they want their kids to have so that they have a quality education and an excellent education in Milwaukee Public Schools, and that they had the right amount of staff that they actually need. In the school to be safe and to run a good operation.”
Rebuilding finance staff in wake of $46 million in overspending
MPS is rebuilding school finance staff in wake of reporting lapses
In an interview with the Journal Sentinel editorial board April 15, MPS superintendent discusses accountability for district’s financial problems.
The $46 million budget shortfall from the 2024-25 school year started coming into view last fall and was confirmed in mid-January. Cassellius noted that in addition to hiring a new superintendent, MPS also parted ways with its comptroller and CFO.
“We are really rebuilding the personnel and staff of the finance department. That is what’s critical, is having the right people in the right seats doing the work,” she said. “Also critical is making sure that you have the right controls in place. The audit findings found that we did not have proper controls in place and now we have those proper controls in place and when we find things we put new SOPs in place and that is what any business does.”
Identifying that shortfall, though painful, was the result of better accounting.
“Being three years behind in auditing means that you don’t have full sight on your actual revenues and expenditures. And so we have now full sight of our revenues and our expenditures and that’s why we were able to see this new deficit of $46 million,” she said. “And we still continue to work with DPI on those processes to make sure that every month we’re doing monthly to actuals and doing those accounting, reporting that to the board. In a way that is consumable to the public that they can understand.”
Jim Fitzhenry is the Ideas Lab Editor/Director of Community Engagement for the Milwaukee Journal Sentinel. Reach him at jfitzhen@gannett.com or 920-993-7154.
Property markets move in cycles, and with interest rates rising and other pressures like high fuel costs, some markets are clearly slowing down. Many first-home buyers who have only ever seen markets going up are conditioned to think that when purchasing, competition is always intense and decisions need to be made quickly.
In those times, buyers often feel they need to act fast, stretch their budget and secure a property at almost any cost. But things have definitely changed.
In a softer market, the dynamic shifts. Properties take longer to sell, competition thins, and it’s the vendors who begin to feel pressure.
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For buyers who understand how to navigate that change, the balance of power quickly moves in their favour. The opportunity is not simply to buy at a lower price. It is to negotiate from a position of strength.
If that’s you right now, these are the key skills first-home buyers need to take advantage of in softer market conditions.
The most important shift in a soft market is psychological. In a rising market, buyers often feel like they are competing for limited opportunities. In a softer market, the opposite is true. There are more properties available, fewer active buyers and less urgency overall. This gives buyers options.
When buyers understand that they are not competing with multiple parties on every property, their decision-making improves. They are more willing to walk away, compare opportunities and avoid overpaying. Negotiation strength comes from not needing to transact immediately. When that pressure is removed, buyers are able to engage more strategically.
One of the most common mistakes first-home buyers make is continuing to apply strategies that only work in rising markets. Auction urgency is a clear example. In strong markets, auctions often attract multiple bidders and create competitive tension. In softer conditions, properties are more likely to pass in, shifting the process away from a public bidding environment into a private negotiation.
This is where leverage increases.
Private negotiations allow buyers to introduce conditions that protect their position. These may include finance clauses, longer settlement periods or price adjustments based on due diligence. Opportunities that are rarely available in competitive markets become standard in softer ones.
The Board of Visitors Finance Committee met Thursday and approved a 3.6 percent average increase in tuition, a 4.8 percent average increase in meal plan costs and a 5 percent increase in the cost of double-room housing for the 2026-27 school year. The approval was unanimous amongst Board members, though some expressed resistance to the increases before voting in favor of them.
The Committee heard from Jennifer Wagner Davis, executive vice president and chief operating officer, and Donna Price Henry, chancellor of the College at Wise, about reasons for the raise in tuition and rates. According to Davis and Henry, salary increases for professors and legislation passed by the General Assembly contribute to tuition and rates increases.
The Finance Committee, chaired by Vice Rector Victoria Harker, is responsible for the University’s financial affairs and business operations, and the Committee manages the budget, tuition and student fees.
Changes in tuition vary between schools, with the School of Law seeing at most a 5.1 percent increase, the School of Engineering & Applied Science seeing at most a 3.2 percent increase and the College of Arts and Sciences seeing at most a 3.1 percent increase in tuition for the 2026-27 school year.
For the 2026-27 school year at the College at Wise, the Committee also unanimously approved a 2.5 percent average increase in tuition, a 3.8 percent increase in meal plans and a 2 percent increase in the cost of housing.
Last year, the Committee approved a 3 percent average increase in tuition, a 5.5 percent increase in meal plans and a 5.5 percent increase in the cost of housing for the University.
Davis cited increased costs as the primary reason for the approved increase in tuition. She said that the budget that could be passed by the General Assembly for June 30, 2027 through June 30, 2028 could increase professor salaries — University professors receive raises via this process. Davis said that the Senate and House of Delegates have separate proposals dealing with the pay increases that are currently unresolved, with House Bill 30 raising salaries by 2 percent and Senate Bill 30 raising salaries by 3 percent.
Davis said every percent increase in faculty salaries costs the University $15 million annually, and the Commonwealth will increase funding to the University by $1-2 million to help pay for that increase. According to Davis, the most common way to stabilize the budgetary imbalance caused by raised salaries is through tuition raises.
Beyond the increase in salary, Davis cited the minimum wage increase, inflation and Virginia Military Survivors & Dependents Education Program as increased costs to the University. VMSDEP is a program that gives education benefits to spouses and children of disabled veterans or military service members killed, missing in action or taken prisoner. Davis said that the program is “partially unfunded” and could cost the University somewhere between $3.6 to $6 million, depending on how many students qualify for the program.
Davis spoke on other contributing factors to the increase in tuition, specifically collective bargaining — which allows workers to bargain for better wages and working conditions.
“If we look at other institutions or other states that have collective bargaining, [collective bargaining] does put an upward pressure on tuition,” Davis said.
Prior to Thursday’s meeting, the Committee heard the proposal for tuition increases from Davis and Henry April 6 in a Finance Committee tuition workshop with public comment. During the tuition workshop, tuition increases ranged from 3 to 4.5 percent for the University and 2 to 3 percent for the College at Wise. Both increases approved Thursday are within the ranges originally proposed.
Meal plan costs, on average, will be increasing by 4.8 percent in the upcoming academic year. Davis said that the University has been expanding dining options with the opening of the Gaston House and new locations for the Ivy Corridor student housing that is still in progress. She also said that the University has been taking steps to increase the availability of allergen-friendly food options.
Davis shared that the 5 percent cost increase in housing is due to the expansion of student housing in the Ivy Corridor. Davis also said that there will be 3,000 new units added to the Charlottesville housing market by 2027, of which 780 beds will be for University housing. Davis said that she hopes the Ivy Corridor housing would “free up” the city housing supply by having more students live on Grounds.
Board member Amanda Pillion said she was “concerned” about how tuition increases would harm rural families — she said the constant increases in cost could make a University education out of reach for middle-income Virginians.
“This is the second governor I’ve served under. Both times I’ve heard affordability, affordability, affordability,” Pillion said. “We need to really be conscious of the fact that … there is a large group of people that [are middle-income] that these increases [in tuition and fees] are really tough for.”
The Committee also approved a renovation for The Park — an 18-acre recreational hub in North Grounds — which will cost $10 million. As part of the renovation, The Park will include a maintenance facility, storm water systems and a maintenance access route. Davis said the renovation will address safety and security issues for the 200 people that use The Park daily. According to Davis, the University will use $2 million of institutional funds and issue $8 million of debt to fund the renovation.
The Finance Committee will reconvene during the regularly scheduled June Board meetings.
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