{"id":57094,"date":"2020-07-09T11:36:43","date_gmt":"2020-07-09T09:36:43","guid":{"rendered":"https:\/\/preprod.i4ce.org\/2020\/07\/09\/les-institutions-financieres-publiques-peuvent-contribuer-a-une-relance-juste-et-verte\/"},"modified":"2022-07-01T22:09:20","modified_gmt":"2022-07-01T20:09:20","slug":"les-institutions-financieres-publiques-peuvent-contribuer-a-une-relance-juste-et-verte","status":"publish","type":"post","link":"https:\/\/staging.i4ce.org\/en\/les-institutions-financieres-publiques-peuvent-contribuer-a-une-relance-juste-et-verte\/","title":{"rendered":"Public Financial Institutions can help make the post-covid response \u201cjust and green\u201d"},"content":{"rendered":"
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In less than five months, the development finance community will come together in Paris at the\u00a0\u201cFinance in Common\u201d Summit<\/a>\u00a0to discuss the role of public financial institutions (PFIs) in achieving sustainability and climate goals\u2013 and what COVID19 has changed. PFIs are increasingly committing to support both climate goals and a \u2018just\u2019 transition \u2013 and are now playing a central role in the post-covid responses that governments are already implementing.\u00a0Ian Cochran<\/a>\u00a0and\u00a0Alice Pauthier<\/a>\u00a0explain why even with COVID19, PFIs must continue their important work on aligning their activities with climate and sustainability goals \u2013 and how their progress may be key to ensuring that the response to the crisis is both just and green.<\/strong><\/p>\n

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PFIs are key actors in situations of economic crises<\/strong><\/span><\/h2>\n

Public financial institutions \u2013 whether national promotional or development banks \u2013 have the mandate to support the development of economies and societies. Often referred to as \u2018counter-cyclical\u2019 institutions, PFIs tend to play specific roles within the financial system to help overcome punctual and structural market barriers and failures and have a long-term perspective. While the scope of activities varies, PFIs often on one hand foster and, redirect investments through a wide range of financial instruments: loans, equity, grants and guarantees. On the other hand, PFIs assist governments to develop policy by facilitating stakeholder dialogue, supporting the development of national strategies and plans and providing technical assistance.<\/p>\n

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This makes PFIs key actors to roll out both short term interventions as needed in the current economic crisis, as well as support long-term policy goals as in the case of climate change. The challenge today is linking the short- and long-term priorities to ensure that they use the tools at their disposal to provide resources and foster investments in specific sectors as well as to provide assistance to governments in designing and implementing \u2018just\u2019 and \u2018green\u2019 post-COVID national responses.<\/p>\n

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PFIs are well placed to help lead a \u2018climate-compatible\u2019 post-COVID response<\/strong><\/span><\/h2>\n

Since 2015, a growing number of PFIs are integrating climate change considerations across their strategies, programs and operations. In addition, a growing number of PFIs \u2013 particularly the multilateral development banks and the members of the International Development Finance Club (IDFC) \u2013 have committed to \u2018aligning\u2019 all of their activities with the objectives of the Paris Agreement. Thus, on top of doing the \u2018minimum\u2019 of taking into account climate-related considerations,\u00a0these institutions have committed to ensuring that all of their activities either\u00a0do no harm<\/em>\u00a0or\u00a0actively contribute<\/em>\u00a0to the achievement of the long-term climate goals.<\/a><\/p>\n

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At the start of 2020, operationalizing Paris alignment approaches was slated as one of the challenges for development banks<\/a>. Many of these institutions are now working together either with their peers or with the broader financial community to develop and compare notes on the climate criteria and metrics to guide strategic plans, assess counterparties and transactions, and proactively manage climate risks and support the transition of the broader economy. These very tools can, in turn, ensure that the support provided as part of post-COVID19 responses channeled through the PFIs will\u00a0a minima<\/em>\u00a0take climate considerations into account.<\/p>\n

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In practice, the approaches currently being developed and tested by a few leading PFIs can serve as an essential part of ensuring that transactions designed to support the recovery are at a minimum avoiding the risk of \u2018locking in\u2019 stranded assets and avoiding investments in parts of the economy.<\/p>\n

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that may appear to be working today, but are not part of a low-carbon, resilient tomorrow. While far from perfect today, they nevertheless can help prioritize transactions that have the most impact towards the rapid low-carbon and resilient evolution needed \u2013 event in the current context.<\/p>\n

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A green and just recovery will require that governments and PFIs stay true to their commitments<\/strong><\/span><\/h2>\n

The Finance in Common Summit planned in early November in Paris aims to gather the entire PFIs community and could be an opportunity for all PFIs to take or confirm commitments to mainstream climate considerations in all of their operations and align with climate as well as broader sustainability objectives. Since the start of the year, the focus has increasingly shifted to understand how this role has changed given the COVID19-induced economic crisis.<\/p>\n

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While\u00a0NGOs and civil society are pointing out that the support of PFIs for fossil fuels among others remain high<\/a>, we strongly believe that the Summit is an important moment for governments and other shareholders of PFIs to double-down on these institutions\u2019 focus on climate and sustainability. This could be a major step to ensure that the global post-COVID response is compatible with climate objectives \u2013 and do not increase the risk of the world plunging from one crisis to another.<\/p>\n

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To make sure that PFIs can keep climate high on their agenda requires action from shareholders, upper management, and operational teams \u2013 as well as pathways to sharing and exchanging on practice:<\/p>\n

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