Workshop on Sustainable Finance and Investment in the Global South

Experts discussed research on policy tools and approaches to harness financial markets for just transitions.

IDOS, in collaboration with various partner institutions, organised a workshop dedicated to sustainable finance and investment in the Global South. Hosted in London at the SOAS Centre for Sustainable Finance on 28 and 29 November by the Centre for Economic Policy Research (CEPR), the German Institute of Development and Sustainability (IDOS), the SOAS Centre for Sustainable Finance, and the University of Cape Town, the workshop convened a broad range of stakeholders and encouraged dialogue among researchers, policymakers and financial-sector practitioners.

In line with the objective of fostering sustainable finance and investment for just and resilient transitions in the Global South, participants discussed innovative research on policy tools and approaches designed to harness financial markets for just and resilient transitions. Discussions centred on new research insights into policies and strategies for steering financial markets toward just and resilient transitions. The studies presented both explored trends and developments in countries of the Global South or assessed how global frameworks and policy measures adopted elsewhere affect these countries.

Some of the main takeaways from the workshop include:

1. A global architecture for sustainable finance needs to be developed. This architecture should provide transparency on sustainable economic activities using taxonomies and disclosure requirements, as well as incentives for sustainable investments created by complementary policies, such as credit guidance policies or carbon pricing.
2. We must consider the combined fiscal pressures of high sovereign debt and climate change, which further constrain countries‘ credit, crowd out key development initiatives and reduce the effectiveness of policies aimed at raising climate finance.
3. Local currency lending is crucial for scaling up sustainable finance and investment. Digital technology can be used to mobilise domestic savings, creating opportunities for funding sustainable investments, driving economic growth and improving financial inclusion. MDBs can play an important role in providing various forms of local currency financing, including grants, technical assistance, loans, guarantees and equity investments.
4. National development banks can be crucial in mobilising sustainable finance and investment. Multilateral development banks and international development finance institutions can support them by providing equity capital and guarantees rather than loans.