Weak government institutions, fragmented responsibilities and financing constraints are undermining efforts to turn climate commitments into economic protection and investment, with potential output losses reaching 20% in some economies by 2050, according to a World Bank report.
The report, Governance for Climate and Development, which examines climate and development strategies across 103 economies, says governments face a widening gap between identifying climate risks and implementing the policies, infrastructure and investments needed to address them.
Projected economic losses from climate impacts range from 1% to 20% of gross domestic product by 2050 under current policies in the economies assessed, with poorer, hotter and more vulnerable countries generally facing greater exposure.
The findings highlight the importance of institutional capacity and public financial management in determining whether climate strategies translate into economic resilience, productive investment and job creation.
For Ghana, the report identifies fragmented roles and responsibilities across ministries and government agencies as a challenge to effective climate governance, warning that unclear institutional arrangements can weaken accountability and slow implementation.
The country’s experience reflects a broader problem across developing economies, where climate responsibilities are distributed among national ministries, local authorities and sector institutions, often without sufficient coordination, financing or implementation capacity.
The World Bank found that 70 of the 103 economies covered by its analysis face financing constraints. In 69 economies, climate responsibilities extend to subnational governments, while 62 have gaps in local financing, institutional capacity or data needed to carry out those responsibilities.
The report argues that climate policies need to be integrated into national development plans, sector strategies and government budgets, rather than treated as separate environmental commitments.
Financing Is Only Part of the Problem
The scale of the implementation challenge is reflected in the report’s assessment of climate recommendations. About 57% require additional investment or financing, while 41% focus on improving policies, institutions, incentives, planning and the use of existing resources.
The findings suggest that governments need both more capital and better systems for directing public resources towards climate priorities.
The report also finds that identified World Bank operations support about 32% of recommendations across the Country Climate and Development Reports. The level of support varies widely by country and publication year, with older reports generally having a higher share of recommendations linked to World Bank financing operations.
That measure does not capture all climate-related activity. The Bank notes that governments, other multilateral lenders, development partners and private investors can also support recommendations outside its own operations.
An assessment of 26 World Bank Country Partnership Frameworks completed between January 2025 and August 2026 found that 85% meaningfully reflected the priorities of their corresponding climate reports. However, only 12% showed strong alignment, indicating that recognition of climate priorities does not always translate into substantial programmes with clear targets and results indicators.
Governance and Investment
The report identifies three institutional requirements for effective climate action: clear legal authority and coordination, alignment between national and sectoral plans, and public financial management systems that connect policy priorities to budgets and implementation.
It warns that passing climate legislation or establishing coordinating bodies is not sufficient if governments fail to issue supporting regulations, assign responsibilities, provide resources or establish systems to monitor progress.
The report also highlights the role of predictable regulation in attracting private investment and supporting employment. In low-income economies, business-enabling policies and a predictable regulatory environment account for 49% of job-related recommendations identified in the World Bank’s climate reports.
For private capital to support climate infrastructure and productive sectors, governments need credible regulatory frameworks, capable institutions and mechanisms to manage investment risks. Public and concessional financing will remain important, particularly for projects such as flood protection and ecosystem resilience that may not generate direct commercial returns.
The Bank says the next generation of Country Climate and Development Reports will place greater emphasis on converting investment needs into concrete, scalable projects capable of mobilising private capital.
The central challenge, it says, is no longer just identifying climate risks and possible solutions, but building the institutions and financing systems required to deliver them.
