Finance in Common

The first global summit of all Public Development Banks

PARIS 12 November 2020 Building resilience for people and planet We must get there collectively by organizing the decisive role of our Development Banks.

Organizers President of the French Republic of the Finance in Common Summit Under the high patronage of Mr Emmanuel Macron, President of the PDBs deliver a unique service, French Republic, and with the participation of UN Secretary-General António Guterres, that of linking governments the Finance in Common Summit is: and the private sector

 an initiative of the World Federation of and turning domestic and Development Finance Institutions (WFDFI) international policy signals and the International Development Finance into local solutions. Club (IDFC),

 taking place during the 3rd Peace Forum, WFDFI Chairperson  convened by the Agence française de déve- Thabo Prince Thaman loppement (AFD), with the support of:

 Multilateral Development Banks, IDFC members have collectively mobilized their  regional associations of Public Development Banks (ALIDE, AADFI, financial capacity and ADFIAP, ADFIMI, ELTI, EAPB, EDFI, expertise to provide an D20-LTIC), immediate response to the  relevant international institutions short-term health challenges (UNDP, DESA, UNEP, OECD and the ), as well as to prepare for a

 Caisse des dépôts et post-Covid-19 world that will consignations, require a long-awaited paradigm

 and the COP26, the COP15 shift. and the Generation IDFC Chairperson Equality Forum. Rémy Rioux The Finance in Common Summit BUILDING RESILIENCE FOR PEOPLE AND PLANET

The first global summit of all Public Development Banks, taking place during the Paris Peace Forum in November 2020, will address our common need to build new forms of prosperity that take care of the living (people and planet) in a resilient manner.

In the context of the Covid-19 pandemic and . The subsequent global socio-economic crisis, Summit is intended to the Finance in Common Summit will stress contribute to the COP26 the crucial role of Public Development Banks agenda and the G20 Summit. (PDBs) in reconciling short-term counter- To ensure broad and effective cyclical responses to the crisis with sustainable engagement with all stakehold- recovery measures that will have a long-term ers, and in light of the Covid-19 impact on the planet and societies. Gathering crisis and its consequences, the PDBs from around the world, the Finance in Summit will deploy an innovative Common Summit is an opportunity to: mix of in-person and enhanced digital session formats.  gather for the first time the world’s 450 PDBs and discuss their role, their ambition, their Leading up to the Summit, challenges and opportunities; a research confer- ence will be held on  bring together the financial community at large 10 November, during to design a financial system whereby Public which a consor- Development banks would have the ability tium of promi- The reorientation of to reorient and leverage all financial flows in nent academic global finance towards the direction of climate and the SDGs; and institutions will climate and SDGs needs present papers a deeper and more  contribute to supporting and reinventing and share coordinated effort. Public multilateralism by promoting new forms of insights about cooperation. how PDBs can Development Banks are produce better a significant part of the FOSTERING COLLECTIVE ACTION finance over the solution. long term. Summit The Finance in Common Summit is taking place participants are most 12 November 2020 during the Paris Peace welcome to join. Forum, an annual event focused on improving

FINANCE IN COMMON - 1 Public Development Banks A key to delivering the finance we need for the future we want

Public Development Banks have a key role to play in reorienting existing investment patterns towards – and facilitating increased investment in – sustainable development. With their public mandates and counter- cyclical role, Public Development Banks There are about 450 in commercial banking, individual bank are more relevant than Public Development accounts or consumer credit. ever to contribute to Banks (PDBs, also the reconciliation of called Development The volume of activity of these institu- economic recovery Finance Institutions) tions amounts to about USD 2 trillion around the world, oper­ annually – a stagger­ing 10 percent of and sustainable ating at sub-national, the total amount invested in the world development. national, regional, inter- every year by all public and private national and multilateral sources combined. With their public levels. PDBs share three main mandates and counter-cyclical roles, attributes: PDBs are more relevant than ever to help reconcile necessary short-term  They enjoy independent legal status responses to Covid-19-related crises and financial autonomy. with solutions for long-term sustain­ able development. These institutions  They are controlled or supported by represent a “visible hand” that can central or local governments. help mobilize and direct the finance we need for the future we want.  They execute a public mandate, addressing market inconsistencies A COURSE OF ACTION TO – notably for the financing of small RESPOND TO NEW CHALLENGES and medium enterprises, essential infrastructures, local financial mar- What type of collective action is kets, housing, small agriculture, required to avoid a long recession and regional and international and make the post-Covid-19 recovery trade – to the benefit of entre- a sustainable one? How can PDBs preneurs, rural households, help economies cope with short-term and the most vulnerable, employment support and long-term including women and necessary transformation of indus- young people. tries? How can they implement the transition towards a low-carbon and They are not resilient economy? These questions engaged will be at the core of the Finance in

2 - FINANCE IN COMMON Common Summit. financial markets. PDBs’ volume of activity PDBs are already supporting the cli- A NEW VISION OF mate and SDG agendas. They provide DEVELOPMENT Financing long-term or concessional resources, initiate knowledge-sharing and techni- Some PDBs have already been cal-assistance programs, and promote active for decades, and an increasing private-sector involvement. In their number of governments are either effort to align with the goals of the Paris strength­ening them or estab­lishing new $2,300 billion Agreement and the SDGs, a growing ones. Their legit­imacy is reinforced by ≈ invested annually number of PDBs are also setting new a new vision of develop­ment financing requirements for the allocation of their – one that extends beyond the scope own funding. However, the reorienta- of infrastructure investment or other tion of global finance towards climate tradi­tional mandates and that is capable and SDGs requires a deeper and more of mobilizing both government institu- coordinated effort to profoundly trans- tions and financial markets. form harmful practices. On the ground, PDBs can help deliver 10% concrete and sustainable the institutional change and real of the total amount invested in the world economy outcomes that are required solutions every year to turn the UN SDGs into reality. In a world awash with liquidities, there For example, their funding and advice is an urgent need for a coalition of to governments can boost investment financial institutions able to transform in social infrastructure, notably public resources into concrete and for healthcare. They can sustainable projects on the ground. also help build the con- Such coordination among PDBs would fidence to achieve eventually link international policy carbon neutrality issues with local solutions, and gov- by 2050, while ernments’ ability to identify sustain­ increasing able development trajectories with the use of private-sector opportunities. nature- based On the ground, Public As public institutions, they represent a solu- Development Banks modern and large coalition of actors. tions. can help deliver the PDBs are organized by region, with institutional change and deep roots in local economic and social real economy outcomes fabrics, and with historic support from that are required to turn regional Multilateral Development Banks. They play a vital part among the UN SDGs into reality. local stakeholders and can deploy a wide range of powerful instruments in order to bridge market failures, mobilize domestic resources, redirect investments, support private sector mobilization and promote sustain­ability. PDBs are able to deliver both the “first mile” and the “last mile” of funding, connecting policy intentions with results on the ground – before, after, or in conjunction with

FINANCE IN COMMON - 3 OVERVIEW Public Development Banks AT A GLANCE

There are about 450 Public Development Banks (PDBs) in the world. Where are they, in which sectors, how much do they disburse?

Where in the world What’s What’s are PDBs? Global distribution aa PDB? PDB?

Public Development Banks (PDBs) are a vast family of 5 NEW PDBs North America institutions at the intersection CREATED IN 2019 between finance and public policy. They share three characteristics: International 4% Development  They enjoy independent legal status Finance and financial autonomy. Corporation Banco del (DFC-US)  They are controlled or supported by Bienestar () central or local governments. Central and  They execute a public mandate, addressing South America market inconsistencies – notably for the financing of small and medium enterprises, 19% essential infrastructures, local financial markets, housing, small agriculture, and regional and international trade – to the benefit of entrepreneurs, rural households, and the most vulnerable, including women and PDBs operate everywhere young people. at the international, regional, national or local level

They are not engaged in commercial banking, GEOGRAPHIC mandate Ownership individual bank (% of institutions) (% of assets by nature of owner) accounts or consumer Local 12% 16% Global Multilateral 10% 13% Local Gov. credit. 7% Regional

National 65% National Gov. 77%

4 - FINANCE IN COMMON HOUS 6 types 10% 9% Public social housing 4% 9% LOCAL of mandate 1% Decentralization and local governments MSME About 45 43 Micro-, small- and medium-scale Number of PDBs 159 enterprises 450 PDBs by mandate in the world 15 150 AGRI 28 Agricultural development in 2019. EXIM 30% of them % of the assets 67% Foreign trade were created by mandate GENDEV after 2000 Infrastructures and all sectors

Europe Hellenic Development Bank () Romanian Development Asia $11.2 TRILLION Bank () in assets in 2018 23% International Development Finance Mediterranean 3% 16% Corporation 8% region (DFC-US)

Central Asia 4% $2,300 BILLION 22% average annual Sub-Saharan Pacific investments, representing around Banque of world Agricole 10% World gross capital du Faso formation () 1%

Amazing facts

 The , created at Bretton Woods in 1944, is a global reference for governance, strategy, efficiency and international cooperation  Development Bank is the largest PDB with 2.4 trillion in assets (2018)  Caisse des Dépôts et Consignations (France), created in 1816, is the oldest PDB  21 PDBs make the country with the most numerous institutions 90% of  European Investment Bank, the regional bank for Europe, is a reference for the TOTAL assets development of European economies and infrastructures ($10.2 trillion) are  Scottish National Development Bank, to start operations in 2020, is the newest PDB owned by the 50 largest PDBs

FINANCE IN COMMON - 5 The Paris Peace Forum GLOBAL CHALLENGES, PRAcTICAL SOLUTIONS

For the third year, the Paris Peace Forum is convening all actors of global governance, from heads of state to civil society, to push forward projects and initiatives meant By taking part in to improve collective action. Public the Paris Peace Development Banks are invited to apply Forum, Public to the Call for Projects to present and Development Banks advance their initiatives. have an opportunity to showcase innovative projects. The challenges the bringing together old and new actors world faces – climate of global governance: states and public change, pandemics, entities, multilateral organizations, terrorism, cyber insecurity NGOs and private-sector, foundations, and inequalities, especially civil society at large, and this year, based on gender – ignore Public Development Banks (PDBs). borders. But whereas addressing them would require international Most of all, the Forum is proj­ect- cooperation and collective action, oriented: every year, its Space for collaboration seems to be increas- Solutions showcases concrete gover- ingly difficult as countries are turn­ nance solutions that take on global ing inward. Today, the international challenges. These initiatives can community struggles in finding the be normative – instruments of appropriate responses. law, standards and good prac- tices – or oriented towards Global problems call capacity-building – new for global solutions institutions, mechanisms and innovations. The mission of the Paris Peace Forum is to contribute to bridging this PDBs have also global governance gap. It is based been invited to on a simple observation: global submit their problems without cooperative projects solutions can lead to conflicts. focused o n t h e To advance concrete prac- operational tical solutions where response there are none, the t o t h e Forum fosters Covid-19 hybrid coali- crisis. tions by

6 - FINANCE IN COMMON PDBs, come and promote your initiatives

By taking part in the Paris Peace Forum, Public Development Banks have the unique opportunity to showcase their inno- vative solutions and push their projects forward. A chance for them not only to increase the visibility of their projects, but also test it before diverse audiences, all the while con- necting with potential partners and sharing their experience and knowledge with other project leaders and participants from all over the world. Last but not least, some projects from the Space for Solutions will be selected to receive additional resources with an ongoing support during the whole first year of their implementation.

Projects leaders who will not be able to travel to Paris because of health restrictions will be able to showcase their project online.

Space for solutions exhibiting innovative solutions for concrete action

An international Call for Projects gave special consideration to initiatives addressing the following objectives:

BOUNCING BACK AFTER CONSTRUCTING MORE RECONCILING DEVELOPMENT CRAFTING CORONAVIRUS AND IMPROVING SOLID SECURITY FINANCE WITH CLIMATE SUSTAINABLE TOOLS OF RESILIENCE ARCHITECTURES EFFORTS CAPITALISM

PROTECTING IMPROVING ACCESS MAKING OUTER SPACE SECURING THE OCEANS TO CLEAN WATER SAFE AND SUSTAINABLE CYBERSPACE

FOR MORE INFORMATION REGULATING THE ENHANCING THE ENSURING GENDER ABOUT THE 2020 USE OF DATA AND AI GOVERNANCE OF EDUCATION EQUALITY PARIS PEACE FORUM CALL FOR PROJECTS:

The Call for Projects was open to all key actors of global governance: parispeaceforum.org States, international organizations, NGOs, companies, foundations, philanthropic organizations, development agencies, religious groups, trade unions, think tanks, universities, and more. International Research program The Visible Hand development banks in action for climate and SDGs

On 9-10 November 2020, a research conference will take place in Paris, gathering a community of researchers as well as Public Development Banks representatives. In the context of the Covid-19 crisis, this conference will be an opportunity to exchange insights and findings, clearing the way ahead.

The research An international group of Dev­el­op­ment Banks and regulators. conference aims to prominent research­ ers­ has The paramount question concerns the deliver concrete, been constituted to support scaling up of the Development Banks’ evidence-based the Finance in Common contribution to the action plan for climate recommendations for Summit with a series of aca- and SDGs. The severe crisis affecting the consideration of demic papers. They will liaise the world, which follows the Covid-19 closely with senior officials disruption, is indeed opening an avenue decision-makers. from Public Development Banks for better, larger, and more responsible (PDBs), including members of banking in order to rebuild our economic the International Development systems in a more sustainable way. Finance Club (IDFC) and the World Federation of Development Finance 5 key challenges Institutions (WFDFI), as well as with other stakeholders, notably from the private The research group aims to deliver key sector. The event will be broadcasted contributions on: and its material published in a confer- ence proceedings booklet. 1. The inclusion of Development Banks in the architecture of global finance and OPENING A PATH FOR MORE the efficient use of the various types of RESPONSIBLE BANKING Development Banks (multilateral, inter- national, regional, national, and local). The research group will present its work and findings during a confer- 2. The business model of Development ence on 10 November. This confer- Banks. The research group will aim to ence will aim to deliver concrete, evaluate which of the Development evidence-based recommenda- Banks’ instruments are best suited to tions for the consideration of maximize their impact on sustainable decision-makers who will development. An important task being be participating at the also to catalyze funds from the private Finance in Common sector and to take into account the dif- Summit. That ferent levels of development or priorities includes gov- of the countries. ernments,

8 - FINANCE IN COMMON Research group 3. Alignment with long-term climate reflecting their vision of the and SDG trajectories. A primary role PDBs could play for an challenge for coherent action is to efficient financial architec- coordinators find common frameworks to guide all ture. These institu­tions may  Jiajun Xu, Executive Deputy Dean investments – public and private, in include the IDFC, the Overseas at the Institute of New Structural higher- as well as lower-income econo- Development Institute (ODI) Economics (INSE) at Peking University, mies – from all actors in the direction of of London, the OECD/UNDP, China; leading, along with the AFD the SDGs and the Paris Agreement. On the Institute for Climate research department, the construction SDG alignment and among many other Economics (I4CE) in Paris, of the first comprehensive database on DFIs worldwide ongoing initiatives, the G7-mandated the World Resources Institute initiative led by the UNDP and the OECD (WRI), and the Green Climate  Stephany Griffith-Jones, Financial will present its first results at the end Fund. Other research centers, Markets Program Director at the of 2020. The use of robust taxonomies, think tanks and practitioners are Initiative for Policy Dialogue at Columbia University, United including the framework for sustainable invited to participate and share their States; co-author of investment developed by the European findings on the role that DFIs may The Future of National Union, can also be a useful basis to play in achieving the SDGs. Smaller Development Banks support investment in certain assets or institutions prominent in their home  Régis Marodon, to support climate-related risk analysis. country will be specifically included. Sustainable Finance Multilateral Development Banks and Advisor at the the IDFC, committed to aligning with The AFD, the IDFC and the Ford Economic Research the Paris Agreement, are also making Foundation have confirmed Department progress in defining the appropriate their support for the of the AFD, France methodology. Research Program.

4. Regulatory frameworks and public incentives. These frameworks will be research program examined in their capacity to provide a relevant set of incentives in order to Main participants engage in climate and SDGs. The inclusion of Development Banks 5. Mandate and governance. Aside  Jose Antonio Ocampo, former Colombian Finance Minister; from international and multilateral professor, Columbia University,  Alfredo Schclarek Curutchet, associate researcher, National Scientific development banks, very few PDBs and Technical Research Council (CONICET), currently benefit from mandates explicitly related to the climate The business model of Development Banks and SDG agendas. Best prac-  Stephany Griffith-Jones, research group coordinator (see above) tices on how to effectively  Jiajun Xu, research group coordinator (see above) govern Development Banks  Shari Spiegel, Chief of the Policy Analysis & Development Branch in the (financial autonomy, trans- Financing for Sustainable Development Office of the UN-DESA  Eduardo Fernandez-Arias, former Principal Research Economist, Inter-American parency, accountability, Development Bank etc.) will be discussed.  Patrick Guillaumont, president, and Laurent Wagner, research fellow, Foundation for studies and Research on International Development (FERDI) Reaching out for a stronger Alignment with long-term climate and SDG trajectories coordinated  Kevin Gallagher, Director, Global Development Policy Center of Boston University, effort United States; co-chair, T-20 Task Force on International Financial Architecture  Sébastien Treyer, Director, and Damien Barchiche, head of Agenda 2030 program, Institute of Sustainable Development (IDDRI) Along with the re­  Harvey Himberg, Environmental and Social Safeguard Consultant, Green Climate Fund search group, addi-  Ian Cochran, Director of Financial Institutions Program, I4CE tional institutions may contribute to Regulatory frameworks and incentives the conference with  Ulrich Hege, Vice-President, Toulouse School of Economics, France their own studies  Ricardo Gottschalk, Economic Affairs Officer, UNCTAD  Lavinia Barros de Castro, researcher and manager, BNDES Mandate and governance  Tianyang Xi, political scientist, National School of Development, Peking University, China  Samantha Attridge, Senior Research Fellow, ODI Expected deliverables MOBILIZING A NEW GLOBAL COALITION By challenging a new and significant global community with enhanced capacity of action, the Finance in Common Summit will be a key milestone on the way to the crucial events of 2021, notably the COP26, the COP15, and the Generation Equality Forum.

Expected outcomes for Public Develop­ Making the most ment Banks (PDBs) during the Summit of our momentum and beyond: Within the Paris Peace Forum, whose  Presentation of an overview of purpose is to advance practical gover- the action of PDBs, describing the nance solutions and scale-up projects, complementary role of domestic the Finance in Common Summit is an and international finance as well as opportunity to launch concrete mea- public and private finance in meeting sures and innovative initiatives. The the Paris Agreement’s goals and the Forum will showcase a specific Call SDG agenda. A Public Development for Projects that focuses on the oper­ Banks research paper (or series of ational response to the Covid-19 crisis, papers) – explaining the role and PDBs have been invited to submit and business model of PDBs, projects. Donors might also very well their governance and stake­ take the Summit as an opportunity to holders, their operations announce initiatives that support and Moving forward, the and their impacts – will incentivize the alignment of PDBs be released during the with SDGs. Finance in Common Summit, along with Summit could also other contributions Moving forward, the Finance in Common welcome individual from various partners Summit could also welcome individual statements from a on their vision of the statements from a number of Heads of number of Heads of role PDBs could play State and government leaders, as well State and government for an efficient financial as from all willing stakeholders, notably leaders. architecture. the private sector and civil society, out- lining concrete commitments to adjust  A collective state­ their mandates and support the work of ment from all Public their PDBs towards climate and SDGs. Development Banks declar- ing their willingness to actively By rallying and challenging a new contribute to the recovery while and significant global community with aligning with sustainable finance enhanced capacity of action, and by principles and incorporate the goals of promoting sustained collective action, the Paris Agreement, the Convention the Finance in Common Summit seeks on Biological Diversity, and the 2030 to contribute substantially to the suc- Agenda into their business strategy, cess of the UNSG’s “Decade of Action”. core standards and impact analysis. In addition, the statement would account for progress made.

10 - FINANCE IN COMMON

Finance in Common

The first global summit of all Public Development Banks

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