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Charting a course through polycrisis
International financial institutions are considering bold, generational reforms that give us a chance to avert spiraling climate emergency, feed the world & sustain societies that coexist peacefully.
The 2023 Spring Meetings of the World Bank and International Monetary Fund present what may be the most significant moment of opportunity since the 1940s to enact major structural change to improve development finance arrangements and outcomes. Whether this momentum for transformation is harnessed or missed will depend on whether formal decisions provide real future leverage for:
differentiating in multiple dimensions between risk-building and resilience-building activities;
prioritizing crisis response funding and multilateral cooperation that deliver multiple positive externalities—including, for instance, nutrition security, human health, economic inclusion, human rights and gender equality, and climate-resilient development;
supporting a participatory capital to communities approach that aligns benefits at the human scale with supranational decision-making.
The effort to make international finance more just and inclusive has gained significant traction since Barbados Prime Minister Mia Mottley called on world leaders at the COP26 in Glasgow to account for vulnerability, value accountability, and deliver more just and sustainable outcomes. At the COP27, last year in Egypt, the principles for vulnerability-sensitive debt relief were formalized into what is now called The Bridgetown Initiative.
Janet Yellen, Secretary of the Treasury of the United States, last year called for the World Bank to develop an “evolution roadmap”, detailing its plans for structural reform to address the worsening climate crisis and meet the needs of the 21st century. The Evolution Roadmap was shared internally in December and published in January.
The document outlines three major areas of work:
Review the Bank Group’s Vision and Mission.
Review the Bank Group’s Operating Model.
Explore options to enhance the Bank Group’s Financial Capacity and Model, taking into account recommendations made in the Capital Adequacy Framework Review of the G20.
In other words:
The mission to end poverty must be adapted to a world where GDP growth alone cannot achieve that;
The operating model must adapt to work around unhelpful concentrations of power, incentivized market failures, and the widespread practive of financially rewarding destructive practices, so that investments get where they need to go, to improve human health and wellbeing, while restoring and sustaining nature;
Financial capacity and financing modalities must evolve to achieve enhanced overall value creation, and sustainable development and social benefits, which create a compounding cascade of co-benefits.
For too long, we have watched beneficiaries of the status quo decry sustainable investing as carrying a higher costs. The result has been a compounding cascade of negative externalities, or hidden costs. Instead, we need to recognize that systems produce resonance and compounding cascades can be identified and deliberately supported.
Experimental physics shows that parametric resonance can allow a system working in harmony achieve a higher optimized state. Translated into the language of sustainability: investing to achieve co-benefits can create conditions for further improvements to industrial and financial systems; cascading co-benefits make it easier to keep building resilience and to achieve just and inclusive outcomes.
From a systems perspective, it makes sense to invest in this way. The only reason individuals and institutions don’t take advantage of this opportunity is that incentives reward them for focusing on narrower gains that can create systemic inefficiencies and compounding hidden costs.
International financial reform is about shifting those incentives and making clear the higher value of investing to achieve cascading co-benefits.
The idea is to reduce vulnerability, enhance the baseline of wellbeing, then build on that more solid foundation.
As more of the overall system in any given place is operating with reduced vulnerability, investments start to achieve a resonance that delivers more co-benefits more regularly for more people.
Instead of the Sustainable Development Goals being lofty but unreachable ideals, they should become investable realities.
Reforms under consideration at the 2023 Spring Meetings of the World Bank and International Monetary Fund should support the ability of nations to achieve returns that resonate with human health and sustainable wellbeing. This is why members of the Citizens’ Climate International volunteer network from 31 countries wrote to their country’s respective World Bank Executive Directors with four central asks:
Ground all reforms in human rights and gender equality.
Give citizens the opportunity to share meaningful input into the reforms. This must go beyond the World Bank Civil Society meetings.
Investigate how money can be dispensed directly to households in need and then develop an implementation plan to do so.
After the Spring Meetings, we will be turning to the work of:
Advancing the Capital to Communities standard for inclusive, vulnerability-sensitive, and sustainable climate crisis response, including with respect to Loss and Damage;
Building a first-of-its-kind Co-Investment Platform, to support the mainstreaming of finance that delivers cascading co-benefits linked to food systems;
Coordinating the Integrated Data Systems Initiative, to provide the ongoing technical support for measuring sustainable investment in multiple dimensions;
Detailing non-market approaches to cooperative climate action, as called for by Article 6, Paragraph 8 of the Paris Agreement.
How do you define a livable future?
On April 20, 2023, CCI will convene a global online Talanoa Dialogue event, to bring the voices of stakeholders and communities to policy efforts to secure a just and livable climate future.
Share your priorities for a livable future here.