Prioritizing sustainable finance Â
Ngozi Okonjo-Iweala, Director General of WTO, insisted that trade can be part of the solution. Radical changes are called for. She urged governments to phase out the 1.2 trillion dollars worth of trade-distorting, environmentally unfriendly subsidies that currently exist and redirect those funds to climate finance. Advocating for re-globalization, she warned against misdiagnosing the problems. Interdependence doesnât make us more vulnerable, overdependence does. âIf we head towards fragmentation of trade into two trading blocs it will be very costly. Let us not do this, let us reimagine globalization to build resilience.â Â
Now is the time to include those who were left out in previous versions, she said. âWhy canât we diversify supply chains â not China plus one (Vietnam) but China plus Rwanda or Bangladesh? If we donât become more inclusive we are going to have more populism in the rich countries and the divide between north and south will get bigger.â Â
Why are trillions not mobilized?Â
Avinash Persaud, Special Envoy on Investment and Financial Services to the Prime Minister, Government of Barbados, stated the need to lower the cost of capital. RĂŠmy Rioux, Chairman, IDFC, Chief Executive Officer, Agence Française de DĂŠveloppement, said, âThe trillions are here â in this room, and in other rooms.â He was hopeful: at another recent meeting with 530 public banks from around the world, a new financial architecture was discussed â vast, seamless architecture at scale, with trillions of public investment. We need to build capacity and think bigger. âItâs not about standards, itâs about a common vision for the world.âÂ
Developmental banks must be catalytic to derisk investment in the SDGs: their proactive support and financial incentives should crowd in private sector participation, making sure their intervention brings about outcomes that would not have materialized without the intervention.Â
A few bright spots
There are some examples already of corporations treating the economy as a subsystem of the ecosystem and financing nature solutions as a part of a more enlightened approach. NestlĂŠ, for example, has shifted its mindset from thinking âWeâve got to address natureâ to asking âHow do we help people protect and enhance their livelihoods by addressing nature?â In the CĂ´te dâIvoire, its coffee-growing community has a problem with child labor. NestlĂŠ is directly addressing this by giving bonuses to people who send their children to school, along with other bonuses for engaging in regenerative farming practices, pruning and the like â and wages are paid by mobile cash transfer across the household to husband and wife.Â
Elsewhere, the insurance industry is using nature-based solutions such as mangroves to protect coastlines, rethinking the perceived risks vs real risks and integrating climate and nature into risk management frameworks.Â