Public Development Banks’ catalytic role in achieving sustainable development goals
In October 2021, the International Development Finance Club (IDFC) appointed Natixis CIB to develop a sustainable development goal (SDG) alignment framework. A year later, the Club and the bank are delighted to publish the resulting study, “PDBs’ catalytic role in achieving the UN SDGs”.
Authored by Natixis CIB’s Green & Sustainable hub, the study gathers insights from numerous stakeholders, including IDFC members, data providers, credit rating agencies and investors.
The study frames the notion of SDG alignment from the perspective of public development banks (PDBs). It provides definitions, assessment methods and relevant tools for PDBs to measure and manage their contributions to the Sustainable Development Goals (SDGs).
The study is built on different approaches:
- A review of PDBs’ SDG integration/alignment practices (stocktaking exercise);
- A survey of private investors’ opinions on PDBs’ sustainable financing frameworks, impact demonstration practices and disclosure;
- Bilateral interviews with IDFC members, impact data providers, alternative data collectors/vendors, credit rating agencies, think tanks, consultancies, and NGOs;
- Workshops with members to further explore, test and fine-tune concepts and tools.
A set of SDG contribution principles and recommendations for an entire alignment ecosystem
As a result, the study outlines a set of “SDG contribution principles” and “integration trackers” at entity and activity level. It also proposes a practical and simplistic canvas designed to be used for diagnosis and strategy setting purposes, as well as tools to guide the integration of SDGs in core operations, including strategic capital allocation.
In parallel, key recommendations for the entire “alignment ecosystem” are provided, including:
- A call for governments to refine their national SDG roadmaps, with granular, quantitative guidance about the expected role of private actors and financial players;
- The measurement of impacts ex-ante, in itinere (current) and ex-post, notably through timely and disaggregated data, with emphasis on end-beneficiaries’ segmentation;
- Rating the “SDG contribution potential” of each financing using an SDG Taxonomy (made up of quantitative thresholds or specific features, adapted per activity, geography and financing type);
- Optimization of the use of PDBs’ instruments – including technical assistance, policy-based loans, grants, subsidies and other financial tools – to maximize synergies between projects and SDG gap bridging.
Natixis CIB’s Green & Sustainable Hub is a global expert on green & sustainable finance, with a strong track record in developing innovative financial solutions to help its clients align their operations with the SDGs. It published its inaugural report on the implementation of SDGs for issuers and investors as early as 2018, and in 2020 and 2021 supported the governments of Mexico and The Republic of Benin, as well as the Agence Française de Développement (AFD), in their issuance of SDG bonds, acting as sustainability structurer and joint bookrunner in each transaction.
The International Development Finance Club (IDFC), created in 2011, is the leading group of 27 national and regional development banks from all over the world, a majority active in emerging markets. It is the largest provider of public development and climate finance globally, with US$4 trillion in combined assets and annual commitments above US$800 billion, including US$170 billion of climate finance.