Finance in Common tries to convert networking into green energy

They came, they talked, they conferenced. But at the end of the third annual Finance in Common summit of public development banks, or PDBs, in Abidjan, Côte d’Ivoire, last week, what was achieved? Those looking for bold new climate finance targets from development banks would have been disappointed. This year’s edition, held in Africa for the first time, was titled “Green and Just Transition for a Sustainable Recovery” — a suitably fuzzy title for a “movement,” as its champions and creators at the Agence Française de Développement call it, that claims to include over 500 banks, but that is still finding its place on the global scene. The first Finance in Common summit, or FiCs, in 2020, held virtually due to the COVID-19 pandemic, was the brainchild of Rémy Rioux, the head of AFD as well as the International Development Finance Club, a group of 27 national and regional development banks. At the time, however, efforts to set mutual climate ambition for hundreds of public development banks — many of whom are counted, perhaps unbeknownst to them, as part of FiCs through their membership in regional associations — proved fraught. After long negotiations, the nonbinding 2020 joint declaration, which forms the basis for the FiC movement, saw signatories vowing to “align our activities with the objectives of the Paris Agreement.” Though even that proved too much for the likes of the World Bank and Asian Development Bank, who were listed as witnesses — “in the presence of” — rather than signatories to the 2020 declaration. “If all the PDBs would commit 20% of their commitments each year to green finance, they could extend more than $500 billion of climate finance per year.” --— Rémy Rioux, CEO, Agence Française de Développement Fast-forward to last week and the World Bank is still the elephant, often not in the room, at FiCs — though some World Bank officials were on the program in Abidjan. Devex asked for an official comment from the bank on its status in the FiCs movement last Wednesday. We are yet to hear back. ‘What we need to face climate change’ The FiCs secretariat, headquartered at AFD in Paris, relies on cajoling rather than coercing other banks into more ambitious action on climate. Last week’s summit was less about taking bold new commitments than trying to jointly lobby the banks’ national shareholders. Rioux used his opening address this week to highlight that IDFC members reported a record high $224 billion in green finance commitments in 2021, with climate finance accounting for an average of 20% of their total commitments. “If all the PDBs would commit 20% of their commitments each year to green finance, they could extend more than $500 billion of climate finance per year,” Rioux said. “Which is what we need to face climate change.” The co-hosts of this year’s event, the presidents of the European Investment Bank and the African Development Bank, also used their opening speeches to call for more ambitious climate action, just two weeks out from the 27th United Nations Climate Change Conference, or COP 27, in Egypt. “We have had too many announcements and talking events,” EIB boss Werner Hoyer said. Meanwhile, AfDB President Akinwumi Adesina denounced what he said had been “megawatts of talk” on climate. Such rhetoric arguably set the summit up for failure on the taking-action front. This year’s final communiqué read more as a stocktaking of work to date, such as a FiCs report delivered to the Group of 20 major economies. María José Romero, policy and advocacy manager at the European Network on Debt and Development, or Eurodad, dismissed FiCs in a statement as “nothing more than a talking shop.” However, for Rioux and others who want to see development banks around the world given new mandates to fight climate change, common methodologies for alignment with the Sustainable Development Goals, and more financial firepower, a “call to action” is partly the point. One audience for that message is national capitals and finance ministers. And one of the central aims of FiC appears to be to highlight public development banks' potential — more than $23 trillion of assets and around 12% of total global investment annually — while making the fledgling movement cohesive enough so that it can complement and rejuvenate other existing international fora. EIB’s Hoyer told Devex in an interview in Abidjan that at this month’s annual meetings of the International Monetary Fund and World Bank, he saw several formats, like the G-20, which “do not produce any movement anymore. They’re stuck.” “The geopolitical situation does not contribute to an improvement of that analysis. So we need to think of different formats,” Hoyer said. “[FiCs] is one of these formats.” Network till you drop Squeezed between the annual meetings and COP 27, not all development banking A-listers made the trip to Abidjan last week. Those that did encountered an eclectic mix of cocktail parties — including one featuring a table tennis tournament — research papers, plenary speeches, Adesina leading the dance floor, and a mighty amount of networking. There were over 900 in-person participants and more than 1,000 participated remotely, though the former did not pay much attention to the latter. After the opening plenary most staff from the major banks retreated to side rooms or the ground floor restaurant for bilaterals. One dazed participant told Devex they had attended over a dozen meetings in a single day. Edem Asimadu, a manager at the Roundtable on Sustainable Palm Oil, attended the summit in person to try to get more banks to use her organization’s due diligence standard — as IDFC members do — when investing in a company. However, she told Devex she had limited success as most speakers retreated immediately to a cordoned-off lounge after their panel. “If you don't meet someone while they are coming off the stage, that's the only access you have to them, which is quite disappointing,” Asimadu said. In contrast, Atieno Otonglo, market development manager at the Global Steering Group for Impact Investment, was more positive, saying she and her team had managed to make “very good, important connections for future discussions and to carry on the work that we need to do on the continent.” Sergio Gusmão Suchodolski, CEO of Desenvolve SP, a state-owned financial institution lending to small- and medium-scale businesses in São Paulo, Brazil, told Devex that despite a decade of experience in development banking, Finance in Common has helped him grow his knowledge of the sector and meet business partners. “I had no idea that Vietnam had sub-national development banks that were so active,” he said in an interview in the speakers’ lounge. “I didn't know that Mexico had an agrarian bank issuing, year after year, green bonds with the help of multilaterals. [FiCs] was just a very relevant place to get to know the whole family. And we didn't have, up until three years ago, our own place of convergence.” For Gusmão, it is precisely the contacts made at FiCs that spur greater investment, citing on-lending programs he has implemented with AFD and the Asian Infrastructure Investment Bank. In that sense, it may be too early to judge the legacy of Finance in Common, which will move next year to a still undecided location in Latin America. Still, Francisco José López, a youth advocate sponsored to attend the event by EIB, told Devex that he had been impressed by the organizers’ willingness to engage with young people, but that the next test would come in Sharm el-Sheikh at COP 27. “In the opening ceremony, they were always saying, ‘we need this summit and the road from the summit to COP to be more about actions,’” López said. “That's something nice to hear, we will just see — I guess not in this summit, but perhaps in COP — how much this is going to be represented in real actions and strategies … so that we can see real things happening.” Editor’s note: The reporter’s travel to Abidjan was supported by EIB. Devex maintains full editorial control over the content.