Reconciling development and climate change objectives: an impossible task?

Last week the Guardian published a story about the House of Commons Environmental Audit Committee suggesting that DFID should not channel aid money through the World Bank until the latter stopped funding the construction of ‘dirty’ power stations.

The article exposes both organisations’ difficulties in reconciling the sometimes competing objectives of reducing poverty and contributing to climate change adaptation and mitigation. The mission of both organisations is the former, but both have policies relating to climate change and the World Bank is playing an important and increasing role in climate finance.

DFID’s mission is to provide development assistance to further sustainable development and improve welfare. “Sustainable development” is defined as “any development that is, in the opinion of the Secretary of State, prudent having regard to the likelihood of its generating lasting benefits for the population of the country... in relation to which it is provided.” (International Development Act 2002) Thus even in DFID’s poverty reduction mission, there is a statement regarding the “lasting benefit” DFID funds should generate. Presumably, this can be interpreted to mean that funds should not cause long-term harm. Interventions such as the construction of coal-fired power stations which contribute to climate change would not fall into that category.

The World Bank, for its part, has a Development and Climate Change Strategy which recognises the negative impact of climate change on development and therefore the need of the Bank to manage the risks climate change poses to its “core” poverty reduction mission. The strategy commits the Bank to helping to facilitate the UNFCCC process, mobilising additional finance, facilitating the development of market-based financing mechanisms, leveraging private sector resources, supporting the development and deployment of new technologies and stepping up policy research and capacity-building. (Development and Climate Change Strategy)

Clearly, however, both organisations falter to a certain degree when it comes to integrating their missions with climate change objectives. In its Multilateral Aid Review, DFID assessed the organisations through which it currently channels funds against a number of criteria that it deemed important. “Ensur[ing] its activities are low carbon, climate resilient and environmentally sustainable” was only one criterion among many, and in the final weighting is not worth very much. Therefore, if an organisation performs very well against the other criteria, it is highly likely that DFID will continue to channel funding through it.

For the World Bank, problems arise primarily with regards to the funding of 'dirty' energy project. The World Bank has committed to limiting its financing of coal projects “to cases in which a country has no other options to respond to urgent demands for electricity, and providing several other conditions have been met and the process reviewed by an external advisory committee.” (Energy and the World Bank) (There are, of course, other questions here about why coal would ever be the only option, which I think relate to climate finance issues, but I’ll explore them another time.) Clearly, therefore, the World Bank has made a conscious decision to prioritise poverty reduction over its climate change objectives, at least in certain circumstances.

Is reconciling development and climate change objectives an impossible task? If it is not, how can organisations do it better? These are important questions that impact on the ability of organisations to be accountable to stakeholders for fulfilling various commitments. While I do not have the answers, I anticipate this will be one of the most interesting issues we explore during the course of our Global Climate Change Governance project, and I look forward to reporting back on what we find.