Climate, health, nature, food, and inequality are converging in a global polycrisis; the Paris Summit aims to start a cooperative financing revolution, to avoid ecological collapse and secure a livable future.
Unsustainable practices eventually hit a wall, by undermining the foundations for sustained productive activity. Global heating pollution, nature loss, poverty and inequality, and the ramifications of the COVID pandemic and Russia’s invasion of Ukraine, have created a global polycrisis—in which threats are intersecting and compounding.
The only way out of this proliferating mess is to start using financial resources to improve conditions along each thread of the polycrisis. As France’s President Emmanuel Macron has explained, the Summit for a New Global Financing Pact, which took place in Paris June 22-23, was centered on four principles:
- No one should be forced to choose between combatting poverty or protecting biodiversity and climate.
- We have to respect each country’s own path to sustainable development.
- We need much more public money, much more investment from rich countries, much better coordination from World Bank and IMF.
- We need much more private money, with catalytic support from MDBs to facilitate mainstreaming.
We are facing nature loss and biodiversity collapse, and increasing disruptive and costly climate change, such that food systems will begin to fail, leaving entire regions economically and politically non-viable. In 2022 alone, 50 million people across 45 countries were on the brink of famine, while three times as many people faced acute hunger as before the pandemic—a global hunger crisis of unprecedented scale.
National economies, international finance, and global trade, are still governed by lingering 20th century economic structures that leave most human beings marginalized and underserved. Inequality creates perverse incentives that induce communities to choose development pathways that will destroy their own future—for instance the illegal mining that is contaminating drinking water and threatening ecosystems in rural areas worldwide, because farmers cannot earn enough by doing what we all need them to do.
The first order of business must be to stop punishing vulnerable countries for climate-related disaster costs they cannot control. Countries that have emitted large amounts of global heating pollution, and which have accumulated wealth based on those polluting activities, cannot treat low-emitting countries that incur massive costs—sometimes losing their entire annual economic output in a few hours—as culpable for the fiscal ramifications of those disasters.
Vulnerability-sensitive debt relief needs to move forward right away. The World Bank is now offering countries hit by climate impacts a way to pause debt repayment, though this will apply only to new loans. To navigate the polycrisis and establish solid foundations for shared sustainable development, all sovereign debt needs some vulnerability-sensitive adjustment.
This will be complicated work, but affords an unprecedented opportunity to unlock new resources for a more fruitful kind of economic development, both in rich countries and in low- and middle-income countries. This is why the Finance in Common meeting included the broad spectrum of public development banks (PDBs) and multilateral development banks (MDBs).
- Local, national, and international financing and development strategies need to evolve.
- Cooperative de-risking mechanisms need to emerge that can expand mainstream investment in multidimensional value creation—creating value beyond financial gain that improves conditions for future investment, enterprise, and ongoing shared sustainable development.
- Private-sector actors are asking for first-loss guarantees, new guarantee mechanisms, and cooperative financing strategies that can match public and multilateral development finance with private investment to accelerate the transition to sustainable practices across value chains.
The Good Food Finance Network is working to establish a first-of-its kind Co-Investment Platform for Food Systems Transformation, which will leverage multidimensional metrics, mutual accountability systems, and financial innovation to mobilize investment partnerships that mainstream finance for healthy, sustainable food systems.
Non-market approaches to cooperative acceleration of climate action, under Article 6.8 of the Paris Agreement, present an unprecedented opportunity to renegotiate terms of trade, development, and finance arrangements, to act on the four principles of the Paris Summit.
In 2020, informal consultations with CCI-linked stakeholders around the world led to the creation of six Principles for Reinventing Prosperity:
- We are all future-builders.
- Health is a fabric of wellbeing and value.
- Resilience is a baseline imperative.
- Leave no one behind.
- Design to transcend crisis.
- Maximize integrative value creation.
In March and April of this year, citizen stakeholders from 31 countries sent personal letters to World Bank Executive Directors representing their country or region, calling for reforms that:
- Support the Bridgetown Initiative;
- Advance human rights and gender equality;
- Welcome meaningful, ongoing citizen and stakeholder input;
- Investigate direct delivery of funds to households, as a foundational support for climate-resilient development.
Further calls for human rights, indigenous rights, and a vision for shared sustainable development, are in the works. What all of this is ultimately about is putting trillions of dollars to work for people and planet, to avoid unaffordable and unmanageable chaos. Little by little, financial business as usual will fall out of favor, as modes of broader value-creation are put into practice and proven.
From now through 2025, there is an unprecedented opportunity for investors and institutions to begin aligning their overall holdings with successful climate-resilient, nature-positive, and inclusive sustainable development. Doing so will secure a strong position in the highest value segments of the future economy.
- CCI Press Release on the Paris Summit on a New Global Financing Pact
- After the SB58 negotiations: Only high ambition makes sense now
- Transform finance to make human experience climate-safe
- Non-market approaches as critical drivers of climate ambition
- Capital to Communities – The 2022 Reinventing Prosperity Report
- Global network of citizens urges World Bank Group to upgrade for fair and sustainable development