correction
A previous version of this story incorrectly stated that Michael Froman was on the board of Mastercard. He was a senior executive.
Fighting climate change increasingly comes down to money — who has it, who doesn’t and who has the levers to help the world’s developing countries withstand the ravages of climate change.
Ajay Banga controls some of those levers. In June, after decades as a corporate executive, he became the first person born in the Global South to lead the World Bank Group, a powerful set of institutions that last year issued $128 billion in loans, grants, investments and guarantees.
But while the Indian-born Banga may appear to have the credentials to bridge the divide between rich and poor countries, he faces multiple challenges just five months into the job.
Climate activists say that he’s not doing enough. Congressional Republicans refuse to appropriate the funds Banga needs to prove his critics wrong. And leaders from some developing nations reject the idea that the World Bank should have permanent control of a fund to help them cope with climate change, saying that it gives the United States too much influence.
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Later this month, scores of delegations will convene in Dubai for the global climate conference known as COP28, where the World Bank will again be at the center of a dispute between poor and rich nations.
“My job is not to be where politics comes to die,” Banga said in an interview with The Washington Post. “My job is to care about poor people and development and climate, and try to keep the politics away and find areas of common interest.”
Banga is well aware the 79-year-old institution he runs faces deep distrust over past mistakes — such as financing destructive dam projects and fossil fuel ventures. Having replaced a Trump appointee who seemed indifferent to climate change concerns, he has made clear he intends to steer the World Bank Group in a different direction.
During a recent discussion at the Council on Foreign Relations, he acknowledged the urgency of climate change: “We need to get past the talk because my grandchild’s time is running out.”
A product of elite schools in India, Banga became a naturalized U.S. citizen in 2007. While working as an international executive at Citigroup, as CEO of Mastercard and, most recently, as vice chairman of the private equity firm General Atlantic, he accumulated a fortune and made connections across the globe.
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At Mastercard, he transformed a sleepy credit card company into a charged-up financial services conglomerate worth $355.8 billion at the end of 2020, an 18-fold increase during his tenure. In his last three years there, Banga earned about $68 million, according to Mastercard’s 2022 proxy statement.
Because of his corporate ties, some leaders of developing nations doubt he will be an agent for change. Harjeet Singh, leader of a coalition that includes eight vulnerable island nations, said he is skeptical that Banga will shift the World Bank’s policies toward those of equity, as opposed to profit.
“While rich nations may applaud Ajay Banga’s appointment, we must ask ourselves: Is he truly the leader we need?" said Singh, global engagement director of the Fossil Fuel Treaty Initiative, in an email. “His background may grant him insights into the developing world, but does he grasp the urgency of our times?”
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Banga’s supporters, however, say he fully grasps the need for action and has only been in his current job a short time.
“He is charismatic and visionary,” said former U.S. Trade representative Michael Froman, who worked on global climate negotiations as an economic adviser to President Barack Obama. Now president of the Council on Foreign Relations, Froman knew Banga at Citigroup and later as a senior executive at Mastercard. “When you’re with him, he is completely and utterly focused on you.”
Others agree that Banga has a personal touch rarely seen in the ranks of top executives.
“He is one of the most decent human beings I’ve met in leadership of big organizations,” said Halla Tómasdóttir, chief executive of The B Team, a group of business and civil society leaders working to transform business. “He has his own name for it. ‘The Decency Quotient.’ I don’t know that others value it or reward it or exhibit it the way he does.”
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Yet Banga’s charm can only go so far given the challenges he faces — not just from developing nations, but from the U.S. Congress, especially House Republicans. For the World Bank to step up its climate lending, and for the United States to contribute significantly to a “loss and damage” fund, Congress would need to approve appropriations. So far it has refused to do so, even as the world’s climate needs grow.
Last year, according to Banga, the World Bank Group’s entire $128 billion of grants and loans paled by comparison to the $1 trillion or more a year many private analysts say developing countries will need for climate change investments by 2025, if they are to protect their populations from more intense heat waves, storms, droughts, rising seas and other impacts of global warming.
“This is tiny compared to the needs,” says economist Jeffrey Sachs, director of Columbia University’s Center for Sustainable Development. “It’s called the World Bank, but it is really a very small institution at this point. It is shockingly subscale.”
Banga “can provide leadership inside the bank,” Sachs added. “But we need leadership from Congress. ... That’s the real sticking point.”
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While some have questioned whether Banga has the necessary political experience, he is no stranger to the halls of power.
He has advised Janet L. Yellen, the U.S. treasury secretary, about what Mastercard purchases indicated about the economy’s direction during the coronavirus pandemic. And he has served as co-chair of the Partnership for Central America, a private effort encouraged by Vice President Harris to advance economic opportunity in the region and thereby reduce immigration pressures in the United States.
Banga also has a plan for making progress on climate finance, even with the current state of U.S. politics. In his recent interview, he elaborated on the strategy: “We just have to get the private sector money."
An elite upbringing in India
Ajaypal “Ajay” Singh Banga was born in a small town in Maharashtra, an Indian state that includes the city of Mumbai. To this day, he often cites stories from India, which led the world with $4.3 billion of borrowing from the World Bank, to illustrate the links between poverty and climate change.
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Many farmers in India, he says, expect and depend upon two crops a year because of the nation’s temperate climate and regular rainfall. But sometimes the rains do not come and farmers are left with one crop, which triggers a cascade of other problems and inequities.
“When it becomes one crop you can no longer afford the cattle you kept,” Banga explains. "Because you can no longer afford the cattle, you no longer make money from dairy. When you can no longer make money from dairy, you no longer keep the farm laborer. When you no longer keep the farm laborer, guess which child gets taken out of school to help you with the farm? The girl.”
Banga had an upbringing far different from those farm laborers. His father was a career army officer who was decorated for service in one of India’s skirmishes with Pakistan and again for excelling at military logistics. The family moved every couple of years, and his father eventually retired with a rank equivalent to a U.S. three-star general.
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Banga attended prestigious schools, graduating with an MBA from the Indian Institute of Management in Ahmedabad. He started his business career in India doing marketing at Nestlé. Later, as India’s economy opened up, he launched KFC and Pizza Hut outlets for PepsiCo before he jumped to Citigroup and Mastercard.
He wasn’t the only one of his family primed for a world in corporate finance. His older brother, Manvinder “Vindi” Singh Banga, spent 33 years at Unilever, including an executive board post, before joining Clayton, Dubilier & Rice, a U.S. private equity firm in 2010.
Despite his privileged upbringing, Banga has occasionally felt the sting of discrimination as a member of a religious minority. Like other Sikh men, he wears a turban, bracelet and full beard, and has talked openly about the prejudice that Sikhs have encountered at airports and elsewhere by people who presume they are Muslims.
“I know what it’s like to be afraid and judged because of how you look,” he told Mastercard employees in the wake of George Floyd’s murder in 2020. In that message, he added, “I assure you that racism or mistreatment of any kind will never be tolerated here.”
Banga said he wears his beard and turban “with the pride it deserves” and is driven by his beliefs that “there is only one God and that god is truth” and that you reward yourself by serving others.
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“Those two things are the bookends of my interpretation of the religion … and that makes me a Sikh,” he said. “It’s not about being nice but being fair and transparent.”
Building bridges, learning a bureaucracy
Fairness and transparency are not words that many critics associate with the World Bank. In his email, Singh called the bank “an entity notorious for exacerbating crises and perpetuating global inequality.”
The United States has had a controlling voting stake in the World Bank ever since the U.S. and its allies created it near the end of World War II. As recently as 2010, the bank was financing fossil fuel projects, including a $3.75 billion loan that year for South Africa.
Over the decades, its leadership has varied, reflecting the priorities of whomever occupies the White House.
Banga’s predecessor, David Malpass, was appointed by President Donald Trump. Asked at a 2022 New York Times event whether he accepted the consensus that the burning of fossil fuels has caused global temperatures to rise, he repeatedly equivocated, saying, “I’m not a scientist.” He resigned effective June 2023, nearly a year before the end of his term.
To signal his commitment to change, Banga has been traveling extensively, meeting more than 50 world leaders — part of an effort to secure new capital and to help the World Bank facilitate more loans.
He has also been getting an education on the internal dynamics of the World Bank, which has roughly 22,000 employees, 189 member countries and development experts across the globe. It is highly bureaucratic, with units such as the International Bank for Reconstruction and Development (IBRD) and International Finance Corp. (IFC).
“The bank is lovely at coining terms for stuff,” he said. “I think there is a senior vice president for acronyms hiding somewhere in the building.”
Banga’s spacious office near the White House contains mementos of his management philosophy. Years ago, he received a piece of mail with monthly calendars on one side and pithy pieces of wisdom on the other. “Fail smarter,” said one. “Done is better than perfect,” said another. And then, “Question everything. Always.”
Banga kept the aphorisms and has hung enlarged versions near his conference table.
Critics: climate change must come first
Although the World Bank’s historic mission has been to alleviate poverty, Banga faces pressure to reallocate its resources squarely on climate change.
As of 2022, the bank’s total climate financing portfolio has grown to a record $29.4 billion, accounting for 40 percent of the total of the two biggest divisions of the World Bank Group.
Some climate watchers say that is a start, but far from sufficient.
“If the bank is serious about meeting its array of development goals, it cannot do so without first tackling climate change,” Scott Moore, a University of Pennsylvania professor, wrote in a July article in Foreign Affairs. Moore, a former water expert at the World Bank, said climate change is poised to overwhelm many of the bank’s projects and goals and should be its “raison d’être.”
“I look a little bit askance at questions about whether its [climate finance] goal should be 38 percent or 45 percent because in my mind it should be 95 percent,” he said in an interview. “What else matters for a development institution?”
Banga counters that alleviating poverty must remain a priority, but that the bank’s vision “needs to go beyond poverty to embrace a livable planet.” As part of its portfolio, the bank has set aside $14 billion in coronavirus pandemic aid and funding for reconstruction of Ukraine — once the fighting stops there.
Even without those other obligations, Banga said it is unrealistic to think that the Global South’s climate needs can be addressed by the bank alone.
He told The Washington Post: “I don’t believe that there will ever be enough money in government coffers or in rich or poor countries” to get ahead of the climate challenge.
The answer, said Banga, is private capital. The World Bank has financial tools — such as political risk insurance or concessionary loans — to pry loose money from the private sector. It also has the clout to remove barriers that hinder private investment in developing countries, and named 15 top executives and economists in July to do that through the Private Sector Investment Lab.
“The lab is looking at how to use the bank’s existing instruments to maximum effect and with maximum speed,” said Mark Carney, former governor of the Bank of England and co-chair of the group.
This year, Banga has sought to woo leaders in the developing world who are outspoken about climate change, such as Barbados Prime Minister Mia Mottley, who has led calls for $100 billion in new funding for multilateral development banks.
The World Bank has said it would offer new Climate Resilient Debt Clauses — or “pause clauses” — to its most vulnerable borrowers, so they can redirect money quickly to rebuild their economies in the event of a climate emergency.
Despite those efforts, Banga’s bank remains a flash point in the run-up to COP28. Negotiators have been trying to hammer out details of the long-discussed “loss and damage fund,” including who would administer it and who would fund it.
Until Saturday, the talks were on the verge of breaking down over questions about overhead fees the bank could charge and the independence of the loss and damage funds. But then delegates from developing nations reluctantly agreed to let the World Bank host the fund on an interim basis.
The Biden administration wants the bank to permanently oversee it, in part to make it easier to obtain money from Congress.
“The Global South’s frustration is understandable,” Banga said in a speech last month. “In many ways they are paying the price for the prosperity of others.”
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