Ajay Banga, the World Bank nominee, must trade finance for climate

In January 2020, Mastercard’s then-CEO Ajay Banga wrote a corporate appeal on the payments company’s website. “I don’t think I need to tell you why action on climate change is needed,” he began. “Hectares of forest are always on fire. Trillions of tons of glacial ice are melting. Temperatures are rising.”

Three years later, this haunting rhetoric is being scrutinized by amused World Bank officials as they try to understand who the man who will soon become the institution’s president is and what he stands for.

If supported by other shareholder nations, Banga, the new US candidate, faces the daunting task of reshaping the bank’s mission against a backdrop of divided countries and a cumbersome, uncooperative bureaucracy. The multilateral lender, established after the 1944 Bretton Woods Accords, faces ongoing criticism from smaller, less wealthy nations seeking help to pay for the ravages of climate change.

Wealthier countries have recently pushed the bank to offer more concessional finance for climate projects, to commit to greater mobilization of private finance, and to push through reforms to free up more of their existing cash. The sudden departure of Trump-appointed David Malpass has presented the US – which normally elects the head of the bank – with a chance to install someone new.

But Banga, 63, an Indian-born Wall Street lover, wasn’t the one development financiers and others had in mind as they weighed who could accelerate the bank’s metamorphosis into a green development financier. “You’ve landed someone no one in our world has heard of,” says one development official.

Banga, a naturalized US citizen who describes himself as the “Made in India Guy,” studied economics at Delhi University before working for Nestlé and then, as India’s economy liberalized, fast-food franchises like Pizza Hut and KFC established. He joined Citigroup in 1996, eventually becoming Chief Executive of Asia Pacific operations before joining Mastercard in 2009. A year later he became CEO.

The son of an army officer, Banga, previously told the FT that moving frequently as a child brought benefits later on. “I make friends quickly. I adapt easily to new situations. I’ve always been the new guy on the block, so I had to learn to break into established groups.”

Widely popular, he is described by those who know him as humble and approachable, a good listener and someone with a personal touch. As a music fan, his tastes range from Sikh radio and jazz to Elvis Presley and Lady Gaga. “As a person, he can talk to anyone,” says Rick Haythornthwaite, who served as chairman of Mastercard as CEO.

Banga also directed financial success. During his tenure at Mastercard, he tripled revenue, increased net income six-fold, and grew market cap from under $30 billion to over $300 billion. “Ajay has an incredible record at Mastercard,” said Ken Moelis of Moelis & Company. “He is one of the most respected figures in finance.”

In recent years, Banga has been chairman of the investment company Exor, which owns a majority stake in football club Juventus, and as an independent director at Temasek, Singapore’s sovereign investment fund. He was also vice chairman of General Atlantic, a US private equity group, and advised on its climate-focused funds.

In 2020, he launched Mastercard’s pledge to plant 100 million trees. “We see it as a platform to unify corporate sustainability efforts and make meaningful investments to protect the environment,” he wrote. On the website, he boasted about his “green-certified offices” and the desire to achieve a “zero-waste footprint”.

But these efforts are causing a stir in the developing world. “Reducing single-use plastics in the office canteen is all well and good, but delivering and implementing climate investments in the developing world is another matter entirely — and I’m not sure he has that experience,” says another development official. “It’s not at all what I expected. The US government has communicated that this would be a climate person.”

A successful overhaul of the bank’s climate approach will mean adopting some of the trickier measures proposed by a G20 panel last year and grappling with the highly technical process of how the lender measures its financial risk. Banga’s supporters hope his corporate experience, which includes his work in microfinance and financial inclusion, will be an asset here – and when it comes to attracting more money from the private sector.

According to Rachel Kyte, dean of the Fletcher School at Tufts University, Banga’s previous work with governments should help him take the multilateral baton. “It’s an inspired choice,” she says. “He is a proven change management leader.”

This is needed at the bank that has called on Janet Yellen to ‘mobilize more’ private finance. Some shareholders want reform efforts to include new targets tied to how much private capital the bank leverages, rather than how much money it lends.

Nominations close at the end of March and if there are no surprises Banga will start in May. In the meantime, bench watchers and the climate world will continue to scour his past for clues. It may be “a bit flimsy on the climate and development credentials,” says Claire Healy, director of Washington-based climate consultancy E3G. But he also comes across as “like a GSD guy – getting things done. And we need that now more than ever.”

aime.williams@ft.com

James Fontanella-Khan and Antoine Gara contributed coverage

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