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Providing space for actors to discuss what’s needed to make sustainable finance work

What is needed for private actors to deliver financial products in developing countries? What can be done to ensure local needs are taken into account in tailoring products and funding projects? Questions that members of the SSFC Advisory Board members discussed at UN Headquarters in an event on the sidelines of the ECOSOC Forum on Financing for Development (FfD).  
“We need more money to implement the Sustainable Development Goals,” said UN Secretary General Antonio Guterres when opening the Forum on Financing for Development in New York in mid-April.

How “more money” could be mobilized, and what was needed to make investments actually work on the ground was what actors from the financial sector, research, and civil society discussed at a side event to the Forum hosted by the Swedish mission to the UN and organized by the Stockholm Sustainable Finance Centre (SSFC).

“We have high hopes for the Stockholm Sustainable Finance Centre providing us all with insights into accelerating and promoting the shift in capital investments required to deliver on the 2030 Agenda, Addis Ababa Action Agenda and the Paris Agreement,” said Peter Eriksson, Minister for International Development Cooperation, in welcoming panelists and audience to the event.

Need to tailor financial products in light of local preferences
Setting the scene for the panel discussion, Matthew Osborne, a research fellow at the Stockholm Environment Institute (SEI), presented a case study from Mbale district, Uganda. There, an insurance scheme was introduced to insure smallholder farmers against climate shocks. However, the products on offer were found to undermine traditional community relations and to attract only wealthier farmers. It was not until researchers looked more closely at the needs, preferences and behaviour of the local farmers that insurance products were tailored that worked for famers as well as insurers.

The case study presented by Matthew Osborne resonated with the audience. Photo: Swedish UN Mission

Minister for International Development Peter Eriksson took a great interest in discussions. Photo: Swedish UN mission.

“Business-as-usual models are not sufficient to deliver the goals of the 2030 Agenda, and we therefore need to come up with innovative, design-led approaches that are more responsive to the settings in which they’re supposed to operate,” said Osborne.

“The presentation resonated immediately with many in the audience,” said Professor Arjan Verschoor, a development economist at the University of East Anglia that partnered with SEI in the Uganda case study. “Representatives from the World Bank and from several UN member states showed interest in the case presented as providing an approach that allows the localised pursuit of the Sustainable Development Goals.”

Bringing together experts from both sides of the spectrum
Professor Verschoor himself was one of those panellists with knowledge of local needs and requirements to make investments in sustainable development work. Camilla Barungi, a Uganda-born social impact entrepreneur now based in New York, spoke about the lack of finance at the local level, and the disconnect between investors and projects.

Joining Barungi and Verschoor were panellists with expertise in mobilising private capital for development purposes: Magnus Billing, CEO of Alecta and SSFC Advisory Board Chairman, SSFC Advisory Board members Jens Henriksson, CEO of Folksam, and Swedfund’s CEO Maria Håkansson.

Panel discussion at UN headquarters. Photo: Swedish UN mission

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Panel discussion at UN headquarters. Photo: Swedish UN mission

“What can private capital do, and what can it not do?”
“They represented the private capital that needs to be moved to achieve the goals set in the 2030 Agenda and the Paris Agreement, and we talked about what is needed for them to come on board to deliver finance in emerging markets,” said SSFC Senior Advisor Cecilia Repinski, who moderated the event.

“We talked about what they see as projects or products they can invest in,” said Repinski, adding: “I think it’s necessary to have an open conversation about what private actors can do, and what they can’t do.”

Swedfund’s Maria Håkansson for her part shared experiences of where governmental backed finance successfully exited from projects as private actors came in. Another panellist, Albena Melin of the International Finance Corporation (IFC), shared experience from providing guarantees.

Another issue panellists discussed was how blockchain and digital solutions could provide a resource to inform actors. The event also highlighted the importance of research which, especially when taking the perspective of sustainable finance recipients, can ensure that the design of financial instruments is fit for purpose.

Neither top-down, nor bottom-up: finding middle ground is needed
After 90 minutes, the event concluded having given everyone much food for thought. Asked about her main take-away, Charlotta Bobjer of the Swedish UN Mission said: “All panellists saw a need for partnership and cooperation between different actors on the local and global levels. The conclusion was that a bottoms-up approach is not sufficient. What is needed is that global initiatives and funds and local ownership and knowledge meet in the middle to ensure successful results.”

Research fellow Matthew Osborne agreed: “What we learned was the need to join up the dots and provide the space for all actors on different levels to come together and find solutions,” he said.