TASKFORCE SUPPORT FOR THK FORUM HELPS MOBILISE $10 BILLION FOR SDGS

The Taskforce is a core partner of the Tri Hita Karana Forum on Sustainable Development (THK Forum) which is endorsed by Indonesia’s President Joko Widodo and has launched over 30 projects, investments and initiatives for the UN Sustainable Development Goals. The THK Forum’s flagship event in October 2018 in Bali helped “mobilise up to US$10 billion of investment for projects related to SDGs” said Indonesia’s Coordinating Minister for Maritime Affairs Luhut Pandjaitan, the THK Forum’s official champion.

He added that THK Forum will mobilise billions of dollars of private capital for priority sectors in Indonesia, including green infrastructure, sustainable land use, oceans, ecotourism, health, women and innovation

Coordinating Minister Luhut Panjaitan will open the THK Forum alongside other key partners, including Unilever’s CEO, Paul Polman and CEO of the World Bank, Kristalina Georgieva.

The THK Forum is the first platform of its kind, and the largest conference dedicated to blended finance and innovation in the world. As the fourth most populous country in the world, and one of the fastest growing emerging markets, Indonesia’s leadership on sustainable development is critical.

At the start of 2018, Indonesia issued the world’s first sovereign green sukuk bond ($1.25 bn). It is also home to the world’s first sustainable land use bond ($95m), and has implemented a Roadmap for Sustainable Finance In Indonesia.

Continuing the trend, the THK Forum champions the “SDG Indonesia One” Blended Platform led by the Ministry of Finance and Indonesia’s national infrastructure financing institution, PT SMI (Sarana Multifinance Infrastruktur).

SDG Indonesia One is targeting US$ 4 billion for large-scale green infrastructure projects. Funds collected through the platform have already reached almost US$ 2.5 billion. First investments have been made to help reconstruct healthcare, housing, water infrastructure affected by last year’s natural disasters.  

This is alongside Indonesia’s national infrastructure programme which aims to deliver US$ 400 billion worth of new public-works projects in the transportation, energy, water and waste sectors over the next five years.

INVESTING TO END POVERTY

Climate change, conflict and violence, economic, social and political events have led to an all-time high number of people displaced, putting great strain on domestic and international resources. Fragility and poverty still converge while national-level inequality is on the rise. We have also witnessed a rise in populist-led movements in many countries driven by isolationist tendencies resulting in an uncertain future for global trade.

All these events challenge the commitments the world made in 2015 through the SDGs – and make the spirit of cooperation and multilateralism that have brought us this far more important to uphold than ever. The “Investments to End Poverty” 2018 report from Development Initiatives takes stock of where we are and sets out a renewed agenda on how financing should respond to meet the priorities of Agenda 2030, specifically SDGs 1 and 10 to end poverty and inequality in all their forms everywhere.

This report is the third in a series launched in 2013 ahead of Agenda 2030 to provide evidence-informed analysis on the impact of aid on poverty, the right balance between promoting growth and direct assistance to people in poverty and the need to mobilise more resources and use them effectively. The second report provided greater insight on all the potential resources available to finance the SDGs. Investments to End Poverty 2018 sets out a clear agenda on how aid, within the broad development finance landscape, can be better targeted to support Agenda 2030’s ambitions by focusing on the poorest people first.


TRI HITA KARANA ROADMAP FOR BLENDED FINANCE

The Blended Finance Taskforce was one of the original signatories of the THK Roadmap for Blended Finance - a shared value system to deliver the necessary financing and development impact needed to support the fulfilment of the SDGs.

  • Anchor blended finance into the Sustainable Development Goals (SDGs). Blended finance activities should support developing countries in achieving inclusive, social, economic and environmentally sustainable development that benefits women and girls equally. Blended finance should aim to go beyond what is available, or which is otherwise absent from the market, and should not crowd out commercial finance.

  • Commit to using blended finance to mobilise commercial finance. Blended finance should operate as a channel for commercial capital to address sustainable development. In doing so, blended finance operations should aim at scalability and leverage based on context and conditions. Blended finance should assume a pathfinder role of bringing in commercial capital into sectors and jurisdictions where financing needs are the greatest, such as in LDCs and women’s finance, while balancing risks and rewards with minimum levels of concessionality. 

  • Design blended finance to move towards commercial sustainability. Blended finance transactions should have a clear strategy for their duration and exit, in particular if concessional finance is involved. That is, the level of concessionality extended to subsequent projects should not only aim at mobilising additional finance, but also be reduced demonstrably over time. This includes that blended finance stakeholders should seek to actively locate pathways for financing private sector investments through market-clearing financing solutions. When blending with concessional finance, the DFI Working Group Enhanced Principles on Blended Concessional Finance for Private Sector Projects  (DFI Enhanced Principles) should be respected. Suppliers of blended finance resources that can be utilised in a concessional manner can play a significant role in scaling up the effectiveness and efficiency of the blended finance market by actors respecting these DFI Enhanced Principles in all structures and initiatives to be funded with their concessional resources.

  • Structure blended finance to build inclusive markets. Blended finance should help to accelerate inclusive sustainable market development, including the local financial market. Local engagement and ownership should be pursued. At the same time, blended finance should be accompanied by efforts to promote a sound enabling environment and investment climate. In addition, availability of information relevant for market making should be coordinated among policy makers, development finance providers, commercial investors and investees to leverage experience and track record. Ultimately, in each market, clarifying, sharing and addressing the root causes for requiring blended financing should be prioritised. 

  • Promote transparency when engaging in blended finance. Accountability and transparency on the appropriate use and impact of blended finance should be pursued. Financial flows and development results should be tracked, reported and communicated. Thereby, blended finance should seek to promote adherence to high standards of conduct by private sector investors and investee companies, including in the areas of corporate governance, environmental impact, social inclusion, transparency, integrity, and disclosure.

G7 Commitment on Innovative Finance for Development HIGHLIGHTS Blended Finance

G7 "Commitment on Innovative Finance", released in June 2018, emphasised the need to mobilise private capital, the importance of the blended finance principles and encourages innovative partnerships:

“We, the Leaders of the G7, acknowledge the importance of public finance, including official development assistance and domestic resource mobilisation, for sustainable development. We also recognise that available public capital alone is insufficient to support the economic growth and sustainable development necessary to lift all populations out of poverty, and to work towards the aspirations outlined in the Sustainable Development Goals of the 2030 Agenda. The development landscape has changed significantly in the last few years and the G7 can now seize new opportunities for global action. New sources of domestic and international private financing that complement public sector resources and innovative solutions for sustainable development and inclusive economic growth are emerging, together with new tools, technologies and approaches to partnership as outlined in the Addis Ababa Action Agenda.”

Read the full statement here: Charlevoic Commitment on Innovative Financing for Development  

RELEASE OF BLENDED FINANCE ACTION PROGRAMME AT THE WORLD BANK / IMF SPRING MEETINGS

The Taskforce has developed an ambitious plan of action to increase mainstream private investment for the SDGs for release at the April 2018 World Bank / IMF Spring Meetings.

The Action Programme contains 8 key initiatives, taking Taskforce recommendations from “Better Finance, Better World” to turn them into action. 

The 12-18 month Action Programme is championed by leaders from across the investment and development finance community including HSBC, Credit Suisse, Aviva, Investec, Allianz, EBRD, the IFC and the Rockefeller Foundation.  

Read more about the champions and the Action Programme here

Blended Finance Taskforce calls for SDG action alongside Business Commissioners

The Business Commission was established to make the business case for the Sustainable Development Goals (SDGs).  Its flagship report, "Better Business, Better World", mapped the economic prize for companies that align with the SDGs, and how to achieve it.  The Business Commission, a two year initiative, formally closed its doors in January 2018, but its legacy lives on through its daughter initiatives - including the Blended Finance Taskforce. 

Watch our Blended Finance Taskforce members - such as Marisa Drew from Credit Suisse, Mark Wilson from Aviva and Hendrik du Toit from Investec - call for real action for the SDGs alongside other global business leaders. 

"Better Finance, Better World" report launch at the World Economic Forum

The Taskforce released its consultation paper “Better Finance, Better World” at the World Economic Forum (WEF) in January 2018. The paper sets out the business case for scaling up the blended finance market as a driver of global growth, and presents key areas where we can “shift the needle” to unlock private capital at scale for the SDGs.  

Read more about the report launch also from Bloomberg and The Guardian.

Watch Gavin Wilson, former CEO IFC Asset Management, introduce the report in Davos at the Blended Finance session "From Pipedream to Pipeline".