International development banks considering reducing climate finance under pressure from Trump administration

(Seoul = Yonhap News) Reporter Lee Shin-young = The Financial Times (FT) reported on the 12th (local time) that the U.S. Donald Trump administration is pressuring international development banks to cut their budgets to respond to climate change.

According to the FT, the United Nations previously agreed to raise climate response resources worth $1.3 trillion (approximately 1,747 trillion won) annually by 2035 through the Conference of the Parties to the Climate Change Convention.

However, at least two multilateral development banks, including the Inter-American Development Bank (IDB) and the Asian Development Bank (ADB), are unable to withstand pressure from the United States and are considering withdrawing their climate response funding targets.

According to multiple sources, the IDB last year increased its climate finance volume by 46% to $9.95 billion (approximately 13.37 trillion won) compared to the previous year, but is now under real pressure to withdraw its climate response funding target.

ADB also decided to support climate finance worth $13.5 billion (about 18.14 trillion won) last year, but is now considering whether to withdraw the target.

The UK and Germany are also expected to reduce their climate response funding goals as budget pressures increase.

The FT pointed out that this move is due to the United States putting pressure on multilateral development banks and countries to reduce climate finance since President Trump, who has called climate change a 'hoax', came to power.

A development finance official said, “Multilateral development banks in which the United States holds a large stake are likely to withdraw their targets.”

Another official said the United States is also demanding that restrictions on funding for fossil fuels be relaxed.

A high-level development finance expert said, “Multilateral development banks are giving in to pressure from the United States,” and expressed concern that “this will have enormous consequences.”

The FT pointed out that if the climate finance goal is aborted, it may become difficult to expect developed countries to fulfill their obligations.

The UK has already reduced its international climate aid target from 11.6 billion pounds (about 21 trillion won) over five years to 6 billion pounds (about 10.9 trillion won) over three years, and Germany is also unlikely to achieve its goal of providing 6 billion euros (about 9.35 trillion won) per year.

The IDB explained that "the size of funds alone cannot completely guarantee the performance" of climate finance and that "for this reason, we are seeking ways to place greater weight on indicators that measure impact and performance."

ADB said the climate finance target remains in effect but will be reviewed in 2027 as part of its regular process.