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The World Bank Group (WBG) is investing far more in expanding petrochemical production than in reducing emissions from the sector, according to a briefing prepared by the Institute for Energy Economics and Financial Analysis (IEEFA) for the bank’s annual meeting in Bangkok.

The note, based on findings from the recently launched Global MDB Investment in Petrochemicals Tracker, says the WBG funds $7.49 in new petrochemical capacity for every $1 invested in decarbonisation and efficiency measures.

The tracker, developed by IEEFA and the International Accountability Project (IAP), examines investments by 16 multilateral development banks (MDBs) in the petrochemical and fertiliser sectors. It covers 93 projects with a combined base investment value of $10.04 billion.

According to the analysis, the WBG, through the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the World Bank, accounts for 48 of the 93 projects and $6.6 billion, representing nearly two-thirds of the total value tracked.

The report found that 86.7% of the WBG’s petrochemical portfolio by value, or $5.72 billion, supports new capacity construction, while only 11.6%, or $763.9 million, is directed towards decarbonisation and efficiency projects. Even after the institution began aligning new investments with the Paris climate agreement, it continued to approve more than twice as much funding for new capacity as for decarbonisation, the report said.

A significant share of the portfolio is linked to Indonesian petrochemicals producer Indorama. According to the briefing, seven IFC-backed projects involving Indorama group companies account for $1.66 billion, or around a quarter of the WBG’s petrochemical investment value.

The report highlights a recently disclosed IFC-led investment in a fourth production line at Indorama Eleme in Nigeria. The proposed $1.25 billion project includes a 65-kilometre gas pipeline and has been provisionally assigned a Category A rating, indicating the highest level of environmental and social risk under IFC standards.

The new disclosure comes as an earlier expansion project at the same complex remains under investigation by the Office of the Compliance Advisor Ombudsman and the US Development Finance Corporation’s Independent Accountability Mechanism. Community complainants have alleged pollution of the Okulu River and shortcomings in environmental assessment processes. In 2025, the ombudsman concluded there were preliminary indications of environmental and social harms warranting a compliance investigation.

The briefing also questions the compatibility of petrochemical financing with the WBG’s climate commitments. While IFC and MIGA reported achieving 100% Paris alignment in the 2025 financial year, IEEFA and IAP argue that petrochemical investments remain subject to case-by-case assessment because the sector is not specifically addressed in existing World Bank fossil fuel exclusion policies.

Concerns were also raised about the use of financial intermediaries. Eight projects worth $4.47 billion, representing more than two-thirds of the WBG portfolio value, are channelled through intermediary structures. The authors argue that these arrangements can limit transparency regarding the final destination of funds.

The report cites a 2020 external review that identified weaknesses in IFC oversight of environmental and social risk management by financial intermediary clients. It also notes that a coalition of civil society organisations proposed a dedicated safeguard standard for intermediary financing in June 2026.

According to the analysis, six WBG petrochemical projects with a combined value of $2.54 billion carry the highest environmental and social risk classification. Nearly half of the Group’s exposure, $3.21 billion, is tied to projects that are either proposed or approved but not yet built, which the report says could face future stranding or write-down risks if market conditions deteriorate.

“Petrochemical investments carry long-term risks that merit careful consideration from development finance institutions,” said Swathi Seshadri, Research Lead for Global Petrochemicals at IEEFA. She argued that the sector faces challenges including overcapacity, weaker margins and feedstock supply disruptions, and urged the WBG to apply the same scrutiny to petrochemical investments as it does to upstream oil, gas and coal projects.

Vaishnavi Varadarajan, Asia Pacific Programme Coordinator at the International Accountability Project, said the World Bank Group’s claim of full Paris agreement alignment appeared inconsistent with continued large-scale investment in petrochemicals.

“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,” she said.

The World Bank Group had not responded to the concerns outlined in the briefing at the time the document was being prepared for discussion with the Bank’s executive directors in Bangkok.