This internal background paper has been prepared to help inform the 2010 environment strategy with respect to a proposed way forward on use of country systems. The World Bank Group environment strategy is built on three pillars: leveraging natural resources for growth and poverty reduction; managing the environmental risks to growth and development; and transforming growth paths. As part of its exploration of these three pillars, the strategy considers the question of environmental co-benefits of climate change actions. In particular, it poses the question of potential trade-offs between actions to address climate change and other local and regional environmental priorities, and considers how to maximize co-benefits arising from climate action. The primary objective of this background paper is to assess the potential for climate change mitigation and adaptation actions to provide environmental co-benefits, particularly in the quality of environmental media, flow of ecosystem services, and maintenance of biodiversity. To accomplish this, the paper is organized in five sections: section one gives provision of an organizing framework to identify and classify potential co-benefits; section two gives summary of the external literature on co-benefits; section three gives review of examples from the World Bank portfolio; section four presents initial thoughts on creation of enabling conditions for co-benefit provision; and section five gives review of implications for the environment strategy.