This year, I have the honor of co-chairing the Think20 Task Force on “Purpose & Performance: Reassessing the Global Financial Order” during India’s presidency of the G20. As part of this process, I was recently invited with fellow Co-Chair Hans Peter Lankes from the London School of Economics to organize a panel at the Global Solutions Summit on “Making Global Finance Fit for the Climate and Development Challenge”.
The Global Solutions Summit in Berlin in May 2023 provided a valuable platform for leaders from various sectors, including policy, academia, civil society, and the private sector, to come together for two intense days of proposing and debating research-based policy recommendations. With over 100 speakers and 1,000 international, on-site guests, the summit aimed to develop urgently-needed global solutions to today’s systemic crises. Distinguished figures such as German Federal Chancellor Olaf Scholz contributed their insights to the event.
Our session specifically centered around financing climate change and brought together a diverse panel of experts. Hubert Danso from the Africa Investor Group, Prashant Poondla from SEEK Development, Marie-Ange Saraka-Yao from Gavi, the Vaccine Alliance, and Alexander Sattler from Deutsche Bundesbank joined us to delve into this critical topic.
It is widely acknowledged that realizing the Sustainable Development Goals (SDGs) and global climate goals requires a significant increase in financial investments, particularly in the Global South. This funding must come from a multitude of sources, both public and private. The availability of global financial savings, which amount to hundreds of trillions of dollars, should be a manageable factor. However, despite years of rhetoric and numerous initiatives, very little finance is currently flowing toward addressing the climate and development challenges faced by countries in the Global South. This realization has increased awareness that the current global financial order no longer serves its intended purpose.
So, what will it take to achieve a sustained, many-fold increase in financial volumes at a low cost? Success in this endeavor will likely necessitate fundamental changes in the institutions’ mandate, operating model, and governance that underpin the current global financial order. Additionally, it calls for far-reaching innovation and adjustments in the regulations and financial architecture governing private capital flows. These transformations are necessary for a practical path to achieving the climate and development goals that the global community set for itself in 2015 in Addis Ababa and Paris.
During our panel session, despite the limited timeframe of 45 minutes, we engaged in a thought-provoking and constructive discussion between our panelists and the audience. We explored various avenues to mobilize financial resources for climate change and development initiatives. Key discussion topics included the role of public finance, the importance of private sector engagement, the need for innovative financial instruments, and the significance of international cooperation and collaboration.
Our panelists shared their expertise and experiences, illuminating the challenges and opportunities in financing climate change projects. Hubert Danso highlighted the importance of creating an enabling environment to attract private sector investments in sustainable projects across Africa. Prashant Poondla emphasized the need for innovative financing mechanisms and leveraging global partnerships to bridge the funding gap. Marie-Ange Saraka-Yao highlighted the successful models of public-private partnerships in the health sector, drawing lessons for climate finance. Alexander Sattler provided insights from the perspective of a central bank, emphasizing the role of effective regulation and risk assessment to facilitate sustainable finance.
While our session at the Global Solutions Summit offered only a glimpse into the complex issue of financing climate change, it served as a platform to generate ideas and drive momentum for change. The discussion highlighted the urgency of reevaluating the current financial order and catalyzing the necessary.