Jul 12, 2021 - Economy

Janet Yellen widens Treasury's climate push

illustration of an open wallet containing a coin with the Earth on it.

Illustration: Annelise Capossela/Axios

Treasury Secretary Janet Yellen is planning to meet directly with the heads of multilateral development banks (MDBs) to press for stronger steps on climate change.

Why it matters: Her announcement of the gathering shows how Treasury hopes to help steer more public and private capital toward emissions-cutting and adaptation in developing nations.

  • It's also a sign of the Treasury's expanding role on climate, including newly launched assessments of climate-related financial risks.

Driving the news: "I plan to shortly convene the heads of the MDBs to articulate our expectations that the MDBs align their portfolios with the Paris Agreement and net-zero goals as urgently as possible," Yellen told a climate conference in Venice Sunday just after the G20 finance ministers' meeting there.

  • Yellen said she also expects them to "more effectively mobilize" private capital.
  • But she also credited "tremendous work" MDBs are already doing.
  • World Bank Group president David Malpass told the conference that the group plans to devote an average of 35 percent of its 2021-2025 financing to climate.

The big picture: The U.S. helps fund institutions including the World Bank, the Asian Development Bank, the Inter-American Development Bank and others.

  • Yellen noted MDBs combined are among the largest sources of climate finance for developing nations.
  • She said banks the U.S. contributes to provided a combined $36 billion in climate finance in 2020, and help leverage private capital.
  • A separate communique from G20 finance ministers who met in Venice over the weekend also urges stronger steps from MDBs.

Threat level: Yellen's comments come as progress — or lack thereof — on wider climate finance efforts is potentially critical to the success of the United Nations climate talks in November.

  • Twelve years ago developed nations agreed to jointly mobilize $100 billion annually in funding by 2020 to help poor nations cut emissions and adapt to warming. That target has not yet been reached despite increased funding.
  • "$100 billion is a bare minimum. From the Caribbean to the Pacific, developing economies have been landed with enormous infrastructure bills because of a century of greenhouse gas emissions they had no part in. But the agreement has not been kept," U.N. Secretary-General António Guterres told the G20 finance summit Friday.

Go deeper: Yellen says COVID-19 variants could derail global recovery

Go deeper