Coordinated action on impact investing, improved standardization, and scale is critical to meeting global development finance goals. A plethora of — sometimes disjointed — efforts have already attempted to address those challenges.
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Enter the G-7’s Impact Taskforce. On Monday, the group of over 100 organizations from 40 countries released a set of recommendations for how to improve the industry, increase impact reporting, and mobilize more capital to geographies and issues that need it most.
• “There is a yawning and very dangerous gap between rhetoric and delivery that needs to close fast,” said Nick Hurd, task force chair and former British politician, at a launch event Monday.
• The first task force workstream, led by S&P Global CEO Douglas Peterson, focuses on work standards, disclosure, and transparency. Key recommendations include strong support for efforts by ISSB — the International Sustainability Standards Board of the International Financial Reporting Standards Foundation — to “create a global reporting ‘baseline’ on impact related to enterprise value” and a call for G-7 governments to participate in the board’s consultations.
They propose a “baseline and “build” strategy — essentially creating a framework that can bring more organizations and countries on board over time.
• The second workstream focuses on scaling impact investing for the SDGs and a just climate transition, especially in emerging economies. It recommends coordinating to remove barriers limiting the flow of institutional capital. It also urges support for mobilizing capital, including through MDBs and DFIs, by improving the regulatory frameworks that constrain their investing and by improving institutional investor mobilization.
To realize existing commitments to the SDGs, “we have to force ourselves to move from ideas to strategy, to plans and action,” said Elizabeth Corley, chair of the Impact Investing Institute and head of the workstream, at the event.
• Hurd, Peterson, and Corley urge stock-taking a year from now to ensure accountability.
Here’s what they say success would look like: ISSB is a fully fledged organization working on harmonization, transparency, and integrity of reporting; more private sector organizations are reporting on key performance indicators about social, environmental, and climate factors; the G-7 and G-20 have collaborated to develop the baseline and build impact accountability; G-7 shareholders have considered mobilization targets for MDBs; and significant capital is flowing to SMEs, gender-related efforts, and emerging and frontier markets.
Your opinion
What’s on your 2022 development finance wish list? A new instrument? A new fund? A greater risk appetite? I’d love your thoughts. Write to me at adva.saldinger@devex.com, and you may see your response in a future issue of Invested.
Can IDA deliver on de-risking?
The World Bank needs to play a key role in de-risking investments, and the International Development Association’s Private Sector Window is a tool to support the development of the private sector in the lowest-income countries, says Axel van Trotsenburg, managing director of operations at the bank.
“Wherever you are in the developing world, the private sector is always saying that we need to de-risk investment. So you have this very wonderful debate about de-risking, and nobody is providing de-risking instruments,” he tells my colleague Shabtai Gold.
Read the full interview with van Trostenburg ahead of the completion of IDA’s replenishment this week.
ICYMI: Blended finance is one option to de-risk investments in health.
Make it mandatory
74%
—That’s the percentage of finance leaders who want mandatory reports on environmental, social, and governance, or ESG, performance measures against globally consistent standards, according to EY’s Global Corporate Reporting Survey.
Failing grade?
About four years ago, the European Union began trying to use budget guarantees to spur investment in low-income countries. But that effort has been slow, bureaucratic, and hamstrung by suspicion of the private sector, says Loïc De Cannière, founder and managing partner at Incofin Investment Management.
Incofin is “extremely frustrated” by the European Commission’s “lack of realism and on-the-ground knowledge,” he tells my colleague Vince Chadwick.
Devex Pro: EU’s private sector push lacks ‘realism’
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Investments of interest
• Cross-Border Impact Ventures is a new firm that just announced a $30 million first close of its Women’s and Children’s Health Technology Fund, which plans to “invest in health technology companies that address the health needs of women, children, and adolescents or make health systems more resilient.”
• The G-7 DFIs have launched the Africa Resilience Investment Accelerator, “a new platform designed to boost investment in fragile and conflict-affected states in Africa.”
• DFC last week approved up to $500 million of debt financing for First Solar Inc., the largest American solar manufacturing company, to support the company’s manufacturing facility for photovoltaic solar modules in Tamil Nadu, India.
What we’re reading
The United Nations warns that SDGs are at risk amid the decline of foreign direct investment in Africa. [Devex]
Financing isn’t the challenge for vaccine production in Africa, but bankability is. Here’s a look at how to improve it. [Devex Pro]
Shabtai Gold contributed to this edition of Devex Invested.
About the author
Adva Saldinger@AdvaSal
Adva Saldinger is a Senior Reporter at Devex where she covers development finance, as well as U.S. foreign aid policy. Adva explores the role the private sector and private capital play in development and authors the weekly Devex Invested newsletter bringing the latest news on the role of business and finance in addressing global challenges. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.
