World Bank Group’s petrochemical portfolio funds USD7.49 of new capacity for every USD1 of decarbonisation

12 October (IEEFA): The World Bank Group’s (WBG) petrochemical portfolio funds USD7.49 of new capacity for every USD1 it spends on decarbonisation, according to a note to be shared with WBG executive directors by the Institute for Energy Economics and Financial Analysis (IEEFA) at the WBG’s annual meeting in Bangkok.

The document’s findings are from the Global MDB Investment in Petrochemicals Tracker released in August this year by IEEFA and the International Accountability Project (IAP). The tracker is an interactive database that visualises petrochemical investments across different sectors within the industry from 16 multilateral development banks (MDBs). The database is built using details from the Early Warning System (EWS) hosted by the IAP. It tracks 93 projects covering a base investment amount of USD10.04 billion.

From WBG, the International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and the World Bank accounted for 48 of 93 projects and USD6.60 billion (65.7%) of the first public dataset of MDB investments in petrochemicals and fertilisers.

Expansion amid an open probe

On 27 July 2026, IFC published early disclosure for a fourth production line at Indorama Eleme in Nigeria. The project includes a 65-kilometre gas pipeline and is provisionally rated Category A, IFC’s highest environmental and social (E&S) risk rating. FMO, the Dutch entrepreneurial development bank, has separately disclosed that it is considering a USD100-million participation in the same IFC-led syndication, totalling USD1.25 billion in investment.

Line 3 at the same complex is under a joint investigation by the Office of the Compliance Advisor Ombudsman (CAO) and the Independent Accountability Mechanism of the Development Finance Corporation (DFC). Complainants allege IFC mis-categorised Line 3 as Category B; the investigation covers pollution of the Okulu River and absence of a cumulative impact assessment. In July 2025, the ombudsman concluded that a compliance investigation was warranted, finding “preliminary indications of E&S harms and potential IFC non-compliance”. The appraisal report was circulated to the IFC Board and the WBG’s President.

Indorama group companies appear in seven of 48 WBG projects (all IFC) worth USD1.66 billion, or 25.1% of WBG value.

Paris-aligned deal by deal, not as a portfolio

By project value, the WBG’s petrochemical portfolio is 86.7% new capacity build (USD5.72 billion) and 11.6% decarbonisation and efficiency (USD763.9 million). Even since it began aligning new deals with Paris, the WBG has approved USD2.10 of new capacity for every USD1 of decarbonisation, and the pipeline includes Indorama’s fourth line.

IFC and MIGA report reaching 100% Paris alignment in financial year 2025. The Joint MDB Paris Alignment Principles assess intermediated finance on a counterparty basis, so a guarantee to a bank can be aligned even if the bank’s sub-loan portfolio includes fossil-linked assets.

The briefing also points out that there is no WBG policy that deals with the petrochemical sector directly. The 2019 exclusion covers only upstream oil and gas. The joint MDB principles also leave chemicals off the list of activities that are always aligned, so every petrochemical deal is judged case by case.

Two-thirds of value flows through intermediaries

Eight of 48 WBG projects, worth USD4.47 billion or 67.7% of WBG value, are intermediated. All three WBG guarantees are to intermediated projects. Together worth USD3.08 billion, they sit in structures where the end-use assets are either undisclosed, spread across 22 countries, or channelled through a multi-sector facility.

The 2020 External Review of IFC/MIGA E&S accountability found significant gaps in IFC’s ability to ensure financial intermediary (FI) clients assess E&S risk. A June 2026 civil society organisation (CSO) coalition has formally proposed a dedicated FI safeguard in the IFC Performance Standards.

Risk concentrated in unbuilt projects

Six WBG projects worth USD2.54 billion carry Category A ratings. The WBG’s unbuilt exposure (proposed and approved projects) is USD3.21 billion, or 48.7% of Group value, higher than the tracker average of 37.6%. This is where stranding and write-down risk concentrates.

“Petrochemical investments carry long-term risks that merit careful consideration from development finance institutions. These are long-lived assets in a sector that faces overcapacity, stressed margins, and feedstock supply disruptions. When projects are located in economies with limited fiscal space, or are backed by WBG guarantees, those risks can ultimately fall on governments and their citizens. We encourage WBG to assess their investments in this sector against its Paris-alignment commitments with the same rigour it applies to upstream oil, gas, and coal,” said Swathi Seshadri, Research Lead, Global Petrochemicals, IEEFA.

“WBG claims 100% Paris alignment while investing USD6.6 billion in petrochemicals, a sector built on oil and gas and driving fossil-fuel expansion. That is fossil-fuel lock-in. The WBG must disclose where this money is invested, integrate petrochemicals into its climate policies, including fossil fuel exclusions, and be accountable to the communities impacted by these investments,” said Vaishnavi Varadarajan, Program Coordinator - Asia Pacific, International Accountability Project.

You can access the note here: World Bank Group investments in petrochemicals

Media contact: Prionka Jha ([email protected])

Analyst contact: Swathi Seshadri ([email protected])

About IEEFA: The Institute for Energy Economics and Financial Analysis (IEEFA) examines issues related to energy markets, trends, and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy. (ieefa.org)