In his more than 20-year career in development finance, IDB Invest CEO James Scriven has never “seen such dire situations of humanity,” and he wants his institution to play a major role in addressing these challenges. To do so, IDB Invest needs more money.
The private sector arm of the Inter-American Development Bank is now trying to build its case for a capital increase — laying out a new business plan and the financial necessities to achieve more ambitious goals — as it looks to the next board meeting in September, Scriven told Devex.
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“We do need to step up in the multilateral space. And I'm not only talking about IDB and IDB Invest; I'm talking about all development institutions worldwide,” he said.
“We're on the cusp of a new business model that could be a stronger channel for addressing the development challenges in the world, including climate.”
In late March, IDB’s board of governors mandated a proposal for a capital increase for IDB Invest. And at the Summit of the Americas in early June, U.S. President Joe Biden indicated that the U.S. — IDB Invest’s biggest donor — would likely support the bid.
IDB Invest wants more funds to raise its ambitions on climate change, gender diversity, and how much private capital it mobilizes with its investments, Scriven said.
“There’s a limit of what we can do without more capital,” he added.
Scriven said he could not provide details on the size of the capital increase that IDB Invest will seek or when it might come, but it won’t be until well after the Sept. 30 board meeting.
IDB Invest has sought to lead on climate change, pledging that all new investments will be aligned with the international Paris Agreement by 2023 and that 40% of its investments will be related to climate or green finance by 2025.
IDB Invest is “not tied to doing what others are doing,” Scriven said, adding that he “would be concerned about other multinationals not stepping up to the way that we have.”
The institution expects to walk away from some deals — such as any upstream fossil fuel investments — as a result of its commitment to align with the 2015 Paris climate agreement.
IDB launches first climate facility to support the Amazon
The Inter-American Development Bank is investing $20 million of seed capital to promote sustainable development in the Amazon region.
How exactly to act on climate and other sustainability issues was central to the IDB Invest Sustainability Week conference. Conversations at the event last week made clear that the private sector understands its role in addressing these challenges, Scriven said.
IDB Invest no longer needs to convince clients that responding to climate change is good for their business, but rather can help companies figure out how to do so, he said.
While decarbonization and renewable energy investments continue to be important, IDB Invest — at its shareholders’ request — is looking to invest more in climate adaptation. Scriven said he couldn’t share an exact target since it’s part of the ongoing capital increase discussions, “but rest assured those numbers will be significantly higher than other multilateral organizations,” he said.
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.
