First gathering of world’s public development banks fails to deliver concrete commitments

10 December 2020

Rémy Rioux (left), chief executive officer of AFD, opens the Finance in Common Summit on 11 November. Photo copyright: AFD/Alain Goulard.

Civil society organisations (CSOs) were left largely frustrated as the world’s first summit of public developments banks failed to breathe new life into a multilateral system facing multiple crises (see Dispatch Annuals 2020).

The Finance in Common (FiC) Summit took place on 11-12 November alongside the Paris Peace Forum and was hosted by French development bank Agence Française de Développement (AFD), with the aim of uniting, “the entire finance community in support of common action for climate and the UN Sustainable Development Goals [SDGs].” The summit included 450 public development banks (PDBs) who issued a general declaration on 12 November. Although the declaration included some promising language on PDBs aligning their finance with the Paris Agreement and the SDGs, it contained no time-bound commitments requiring banks to undertake these actions. Additionally, a number of multilateral development banks (MDBs), including the World Bank, failed to join as signatories, despite the non-binding nature of the declaration.

In response to the declaration, Lidy Nacpil of the Asian People’s Movement on Debt and Development (APMDD) remarked, “Southern movements and peoples’ organisations from around the world delivered a clear and urgent message to public financial institutions gathered at the summit that concrete, immediate steps must be taken to end public financing of fossil fuels. They also called for debt cancellation for developing countries. The…Declaration falls very short of these calls.”

With no real commitments to community-led development, respect for indigenous peoples' rights, protection of defenders raising their voice around PDB-financed activities or a rights-based approach more generally, any talk of inclusive development is just that: talkMark Fodor, Coalition for Human Rights in Development

European banks take further tentative steps towards fossil fuels phaseout

The 15 European bilateral development finance institutions (EDFI) announced in the lead-up to the summit that its members, “will exclude new coal and fuel oil financing, and…limit other fossil fuel financing to Paris-aligned projects until generally excluding them by 2030 at the latest.” Meanwhile the European Investment Bank’s (EIB) board approved its Climate Bank Roadmap 2021-2025 on 10 November, outlining how it plans to align with the Paris Agreement.

CSOs criticised these efforts for not going far enough. Laurie van der Burg of Oil Change International noted, “By allowing continued gas financing up until 2030 and leaving options open for gas financing beyond 2030, European DFIs are clearly failing to face up to the climate emergency.” Belgium-based CSO Counter Balance, meanwhile, argued that the EIB’s roadmap was “lacking ambition,” and contains loopholes allowing continued investment in carbon-intensive activities.

Despite their shortcomings, these institutions remain ahead of the curve in comparison to their PDB peers, including the World Bank, which was largely absent from discussions on climate throughout the summit, raising questions about its claims to be a climate leader among MDBs. Following the summit, the Bank confirmed on 9 December it has established a, “target for 35% of its financing to have climate co-benefits, on average, over the next five years,” echoing an announcement made in 2018 that it would provide $133 billion for ‘climate-related investments’ between 2021-2025 (see Observer Spring 2019).

Banks falling short on just, human rights-based recovery

Though the joint declaration committed to “take into account the imperative of a just, inclusive and rights-based transition”, many CSOs were disappointed by the proposals. While women’s rights organisations, including Mexico-based Equidad de Genero: Ciudadania, Trabajo y Familia, prepared a joint briefing ahead of the summit with recommendations for PDBs to support feminist finance principles, none of these were adopted. Five CSO networks, including APMDD and Third World Network, issued a joint response highlighting their concern that the declaration was heavily reliant on private sector finance, with no commitments to strengthen public health services and no response to the sovereign debt crisis (see Dispatch Annuals 2020).

Human rights groups were also unimpressed with the lack of action in support of human rights defenders and the exclusion of communities impacted by development projects from the summit, issuing a joint CSO statement. Mark Fodor of the Coalition for Human Rights in Development said, “With no real commitments to community-led development, respect for indigenous peoples’ rights, protection of defenders raising their voice around PDB-financed activities or a rights-based approach more generally, any talk of inclusive development is just that: talk.”