World Bank President David Malpass announced plans to step down Wednesday, finishing his fourth year amid persistent criticism from Treasury Secretary Janet L. Yellen and White House climate adviser John F. Kerry over Malpass’s level of commitment to slowing climate change.
Malpass, appointed by President Donald Trump, had sought to “increase economic growth, alleviate poverty, improve living standards, and reduce government debt burdens,” according to a statement released by the bank.
But the World Bank, which more than doubled its climate finance to developing nations to a record $32 billion last year, had failed to fund climate-related projects to the degree the Biden administration had hoped. With Congress unwilling to help Biden meet his commitments on assisting developing countries with climate aid, the White House has increasingly turned to global financial institutions to assist with reducing greenhouse gas emissions and bolstering adaptation defenses against a warming world.
Less than a week ago, Yellen had pressed the World Bank to “expand its vision to include addressing global challenges” and to do so “quickly.” And late last year she had asked Malpass for a road map to outline the type and pace of change for the bank.
“The world has changed, and we need these vital institutions to change along with it,” she said. “In today’s world, sustained progress on poverty alleviation and economic development is simply not possible without addressing the global challenges that face us all.”
Malpass faced calls in September for his removal after he declined to say whether he accepted the scientific consensus that man-made burning of fossil fuels was warming the planet. “I’m not a scientist,” Malpass said at a New York Times event. He later modified his remarks, and Kerry did not call for his ouster.
The bank said it had set a target for climate financing to come to 35 percent of its overall lending, resulting in loans of $25 billion annually on average over five years, a figure that many government officials and climate activists say is far too low.
On Wednesday, Yellen praised Malpass’s tenure, noting his support for Ukraine, his assistance for the Afghan people and his commitment to debt reduction at low-income countries while noting that “we all must continue to raise our collective ambitions in the fight against climate change.” She also credited him for regular reports that help countries "prioritize the most impactful actions that can reduce greenhouse gas (GHG) emissions and boost adaptation.”
Others were less generous. In a tweet, Sen. Edward J. Markey said, “I’m glad David Malpass has heeded my calls to resign as World Bank President. His support for fossil fuels and abject failure to fund climate action is unacceptable.” He said the bank “must make up for his missteps.”
“Malpass’s departure allows the World Bank to hit the reset button and finally commit to the leadership needed in the climate finance space,” said Jake Schmidt, senior strategic director for international climate at the Natural Resources Defense Council.
The World Bank spent nearly $15 billion on fossil-fuel-related projects from 2016 to 2021, according to one study. That included a $200 million loan guarantee in 2021 for a gas-fired electricity plant in Uzbekistan.
Confronting a range of global problems, the bank funded a $1.6 billion pandemic fund and mobilized $19 billion for Ukraine in its war with Russia.
“The last four years have been some of the most meaningful of my career,” Malpass said in a statement. “Having made much progress, and after a good deal of thought, I’ve decided to pursue new challenges.”
Before heading the World Bank, Malpass served in a variety of positions under Presidents Ronald Reagan, George H.W. Bush and Trump. He also was chief economist for Bear Stearns, an investment bank, before its collapse. He later joined the Trump campaign as an economic adviser.
According to an informal agreement among member countries, the World Bank chooses a U.S. citizen as president and a European candidate (typically French or German) as managing director of the International Monetary Fund. This custom has been subject to increasing criticism because so much of the global economy lies beyond the borders of the United States and Europe, and the choice of president puts nationality above merit.
The United States possesses 16.32 percent of the total votes in the World Bank, enough to give it veto power over major policy decisions, which require an 85 percent majority. The largest shareholders after the United States are Japan (6.89 percent of voting power), China (4.45 percent), Germany (4.03 percent), France (3.78 percent) and the United Kingdom (3.78 percent).