Multilateral banks are key to financing the fight against global warming. Here is how they work

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International mega banks, funded by taxpayer dollars, are the biggest, fastest-growing source of climate finance for the developing world

As climate change leads to a seemingly endless stream of weather disasters around the world, countries are struggling to adapt to the new reality. Preparing to better withstand hurricanes, floods, heat waves, droughts and wildfires will take hundreds of billions of dollars.

And then there is confronting the root cause of climate change — the burning of fossil fuels like coal, gas and oil — by transitioning to clean energies like wind and solar.

That will take trillions of dollars.

Enter climate finance, a term for how to pay for projects to adapt to and combat the cause of climate change. It's especially important for developing countries, which don't have the same resources or access to credit that rich countries do.

International mega banks, funded by taxpayer dollars, are the biggest, fastest-growing source of climate finance for the developing world. Called multilateral development banks because they get contributions from various countries, there are only a handful of these banks in the world, the World Bank the largest among them.

The banks were a key reason why, in 2022, the world met a goal countries had set in 2009 to supply developing nations with $100 billion annually to address climate change.

At the annual U.N. climate conference that opens Monday in Azerbaijan, global leaders are expected to discuss how to generate trillions of dollars for climate finance. The nonprofit research group Climate Policy Initiative estimates the world needs about five times the current annual amount of climate financing to limit warming to 1.5 C (2.7 degrees F) since the late 1800s.