National and regional development banks have already shown that they can act as pioneers for sustainable development and catalysts for climate finance. In the interests of both planet and people, governments should rely on them much more in implementing the 2030 development agenda.
PARIS – Back in 2015, the world gorged itself on multilateralism. Addis Ababa, New York, and Paris: the year featured landmark international summits that, together, marked a critical step forward to put a world increasingly fractured by climate change, social inequalities, and renewed forms of conflict on the path to sustainable development. Despite considerable progress made in bringing sustainable development to the top of the international agenda, the 2015 summits have not yet led to solutions commensurate to the projected systemic change.
That may be because the summits took place in the wrong order and did not produce a new framework and methodology for efficiently directing investments toward meeting the United Nations Sustainable Development Goals (SDGs). It would have been better to start in New York, where the General Assembly of the United Nations endorsed an unprecedented to-do list designed to kick-start what former UN Secretary General Ban Ki-moon called a transformative “people-centered and planet-sensitive” process. Then, governments could have concluded the historic Paris climate agreement to address the most pressing SDG: Goal 13, to “take urgent action to combat climate change and its impacts.” Finally, the deal struck in Addis Ababa would have provided the necessary means for properly funding this new collective ambition.
Now, we must urgently switch gear, “from summits to solutions.” That means acknowledging that the international community is Janus-faced. On one hand, the post-2015 agenda compels all countries – whether in the Global South or North – to look to the future and make the changes needed to establish development trajectories that reconcile planet and people. On the other hand, the global community continues to look to the past in failing to create the instruments to do development differently, and relies on “business-as-usual” practices in trying to meet the SDGs.
Successful implementation of the new global agenda requires that we break this Janusian deadlock by revitalizing the traditional aid-centered paradigm and promoting the concept of “sustainable development investment” (SDI) to guide as much global investment as possible toward fulfilling the SDGs. SDI would not substitute for official development assistance (ODA), which remains key to funding initiatives that no one else will support (for example, in the poorest countries and the social sector). Rather, SDI would complement ODA as a form of investment that ultimately aims to provide public goods, rather than generate short-term financial returns.
In other words, SDI mirrors the ambition of the new SDGs in the world of finance. Many sustainable financing initiatives already exist in the private sector, in the form of socially responsible investment, and sustainable, green, or supportive finance. There are also public-sector initiatives such as a US$750 million program entitled “Transforming financial systems for climate” launched by the Agence Française de Développement in partnership with the Green Climate Fund (GCF). This large-scale initiative is designed to accelerate the local reorientation of investment flows toward low-emission development in 17 developing and emerging countries, with a strong focus on Africa, by ensuring that climate change mitigation and adaptation projects access financing and that countries are able to implement the commitments made at COP21. Yet the vast majority of global investment, whether international or domestic, is still flowing in a direction that does not support the SDGs, because a comprehensive framework and clear guidance are lacking.
National and regional development banks, alongside multilateral lenders, are equipped to play a key role in helping governments to redirect finance, thereby preventing the 2030 agenda from failing prematurely. They have too long been in the shadow of the international system. But the world has changed dramatically and governments have an urgent need to redirect finance. Confronting unparalleled ecological and human challenges, along with myriad social and economic vulnerabilities, these banks appear as potential game-changers. In fact, they are already working toward achieving SDGs, from rapid economic growth to high-quality development.
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In particular, the International Development Finance Club (IDFC), a group of 25 national and regional development banks, is in a unique position to help realize the 2030 Agenda. With some $4 trillion in combined assets and more than $850 billion in annual commitments for new projects, IDFC members are some of the world’s largest providers of public finance for sustainable development, and already extend long-term financing for SDG-related projects, programs, and policies. As such, they can show the potential returns of sustainable investments and inspire other stakeholders in the financial system to embrace sustainability. We certainly need more finance, but better finance is the real challenge.
In that regard, the IDFC can serve as a laboratory to help change current global investment patterns. In particular, its members can join forces to promote and leverage SDI worldwide by building on their progress in the climate domain. IDFC members already dedicate one-quarter of their annual investments (or $200 billion in 2017) to climate-related projects, and are aligning their activities with the emission-reduction targets of the Paris agreement. Moreover, the IDFC recently signed a strategic agreement with the GCF to increase and redirect financial flows to support the transition toward low-carbon and climate-resilient sustainable development.
The emphasis on climate change is vital, because climatic disruption can undermine all current global development efforts. Anyone who doubts that should recall – to cite just one of many possible examples – Hurricane Maria, which ravaged the island of Dominica in 2017, causing damage totaling 224% of its GDP.
“Because things are the way they are,” Bertolt Brecht once said, “things will not stay the way they are.” The same is true of sustainable development: a change is going to come, because a change must come for the greater interest of both planet and people. National and regional development banks already demonstrate that they can act as pioneers for sustainable development and catalysts for climate finance. The global community should capitalize on them much more to make the SDGs happen!
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PARIS – Back in 2015, the world gorged itself on multilateralism. Addis Ababa, New York, and Paris: the year featured landmark international summits that, together, marked a critical step forward to put a world increasingly fractured by climate change, social inequalities, and renewed forms of conflict on the path to sustainable development. Despite considerable progress made in bringing sustainable development to the top of the international agenda, the 2015 summits have not yet led to solutions commensurate to the projected systemic change.
That may be because the summits took place in the wrong order and did not produce a new framework and methodology for efficiently directing investments toward meeting the United Nations Sustainable Development Goals (SDGs). It would have been better to start in New York, where the General Assembly of the United Nations endorsed an unprecedented to-do list designed to kick-start what former UN Secretary General Ban Ki-moon called a transformative “people-centered and planet-sensitive” process. Then, governments could have concluded the historic Paris climate agreement to address the most pressing SDG: Goal 13, to “take urgent action to combat climate change and its impacts.” Finally, the deal struck in Addis Ababa would have provided the necessary means for properly funding this new collective ambition.
Now, we must urgently switch gear, “from summits to solutions.” That means acknowledging that the international community is Janus-faced. On one hand, the post-2015 agenda compels all countries – whether in the Global South or North – to look to the future and make the changes needed to establish development trajectories that reconcile planet and people. On the other hand, the global community continues to look to the past in failing to create the instruments to do development differently, and relies on “business-as-usual” practices in trying to meet the SDGs.
Successful implementation of the new global agenda requires that we break this Janusian deadlock by revitalizing the traditional aid-centered paradigm and promoting the concept of “sustainable development investment” (SDI) to guide as much global investment as possible toward fulfilling the SDGs. SDI would not substitute for official development assistance (ODA), which remains key to funding initiatives that no one else will support (for example, in the poorest countries and the social sector). Rather, SDI would complement ODA as a form of investment that ultimately aims to provide public goods, rather than generate short-term financial returns.
In other words, SDI mirrors the ambition of the new SDGs in the world of finance. Many sustainable financing initiatives already exist in the private sector, in the form of socially responsible investment, and sustainable, green, or supportive finance. There are also public-sector initiatives such as a US$750 million program entitled “Transforming financial systems for climate” launched by the Agence Française de Développement in partnership with the Green Climate Fund (GCF). This large-scale initiative is designed to accelerate the local reorientation of investment flows toward low-emission development in 17 developing and emerging countries, with a strong focus on Africa, by ensuring that climate change mitigation and adaptation projects access financing and that countries are able to implement the commitments made at COP21. Yet the vast majority of global investment, whether international or domestic, is still flowing in a direction that does not support the SDGs, because a comprehensive framework and clear guidance are lacking.
National and regional development banks, alongside multilateral lenders, are equipped to play a key role in helping governments to redirect finance, thereby preventing the 2030 agenda from failing prematurely. They have too long been in the shadow of the international system. But the world has changed dramatically and governments have an urgent need to redirect finance. Confronting unparalleled ecological and human challenges, along with myriad social and economic vulnerabilities, these banks appear as potential game-changers. In fact, they are already working toward achieving SDGs, from rapid economic growth to high-quality development.
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At a time of escalating global turmoil, there is an urgent need for incisive, informed analysis of the issues and questions driving the news – just what PS has always provided.
Subscribe to Digital or Digital Plus now to secure your discount.
Subscribe Now
In particular, the International Development Finance Club (IDFC), a group of 25 national and regional development banks, is in a unique position to help realize the 2030 Agenda. With some $4 trillion in combined assets and more than $850 billion in annual commitments for new projects, IDFC members are some of the world’s largest providers of public finance for sustainable development, and already extend long-term financing for SDG-related projects, programs, and policies. As such, they can show the potential returns of sustainable investments and inspire other stakeholders in the financial system to embrace sustainability. We certainly need more finance, but better finance is the real challenge.
In that regard, the IDFC can serve as a laboratory to help change current global investment patterns. In particular, its members can join forces to promote and leverage SDI worldwide by building on their progress in the climate domain. IDFC members already dedicate one-quarter of their annual investments (or $200 billion in 2017) to climate-related projects, and are aligning their activities with the emission-reduction targets of the Paris agreement. Moreover, the IDFC recently signed a strategic agreement with the GCF to increase and redirect financial flows to support the transition toward low-carbon and climate-resilient sustainable development.
The emphasis on climate change is vital, because climatic disruption can undermine all current global development efforts. Anyone who doubts that should recall – to cite just one of many possible examples – Hurricane Maria, which ravaged the island of Dominica in 2017, causing damage totaling 224% of its GDP.
“Because things are the way they are,” Bertolt Brecht once said, “things will not stay the way they are.” The same is true of sustainable development: a change is going to come, because a change must come for the greater interest of both planet and people. National and regional development banks already demonstrate that they can act as pioneers for sustainable development and catalysts for climate finance. The global community should capitalize on them much more to make the SDGs happen!