Financial institutions

Global Financial Development Report 2017/2018: Bankers without Borders. Washington, DC: World Bank.

Blended Finance in the Least Developed Countries proposes a flexible and hands-on approach in blended finance transactions in LDCs throughout the project life cycle:

• During pipeline and project preparation, concessional finance providers typically need to spend more time and resources providing technical assistance and capacity-building support to project stakeholders. More broadly, providers of concessional capital and donors should also help strengthen national capacities in LDCs to engage effectively on blended transactions.
• During deal design and execution, greater concessionality may have to be deployed in LDCs. This may come in the form of a larger amount of concessional finance, more generous terms and pricing and/or the use of multiple concessional instruments. In corporate deals, especially in the ‘missing middle’ segment, this results from risks related to the small scale of the opportunity, the early stage of business development, project sponsors lacking a strong record, or the novelty of business models or technologies adopted. In addition to some of these factors, in infrastructure deals higher concessionality may be required to mitigate tariff affordability issues and regulatory risks.
• During the transition to commercial solutions, the phasing-out of concessional support, with the ultimate goal of reaching commercial sustainability, may take longer in LDCs than in other developing countries. Some concessionality may still be needed in subsequent deals—for instance, in infrastructure projects where tariff affordability and social equity issues persist. The government may replace ODA with domestic public resources to keep a project viable, while needing carefully to assess potential fiscal and sovereign debt repercussions.

Green Investment Banks: Innovative Public Financial Institutions, Scaling up Private, Low-carbon Investment, OECD Environment Policy Paper No. 6, January 2017. Operational green investment banks (GIBs) and GIB-like entities: California CLEEN Center California, United States 2014; Clean Energy Finance Corporation (CEFC) Australia 2012; Connecticut Green Bank Connecticut, United States 2011; Green Energy Market Securitization (GEMS) (Hawaii Green Infrastructure Authority) Hawaii, United States 2014; Green Fund Japan 2013; Malaysian Green Technology Corporation (GreenTech Malaysia), Malaysia 2010; Masdar United Arab Emirates 2006; New Jersey Energy Resilience Bank (ERB) New Jersey, United States 2014; NY Green Bank New York, United States 2014; Rhode Island Infrastructure Bank (RIIB) Rhode Island, United States 2015; Technology Fund Switzerland 2014; UK Green Investment Bank United Kingdom 2012

Green Investment Banks: Scaling up Private Investment in Low-carbon, Climate-resilient Infrastructure, Published on May 31, 2016. This report provides the first comprehensive study of publicly capitalised green investment banks (GIBs), analysing the rationales, mandates and financing activities of this relatively new category of public financial institution. Based on the experience of over a dozen GIBs and GIB-like entities, the report provides a non-prescriptive stock-taking of the diverse ways in which these public institutions are catalysing private investment in low-carbon, climate-resilient infrastructure and other green sectors, with a spotlight on energy efficiency projects. The report also provides practical information to policy makers on how green investment banks are being set up, capitalised and staffed.

Lessons from Established and emerging Green Investment Bank Models, OECD Green Investment Financing Forum Background Note, May 2014. What are Green Investment Banks (GIBs) and how can they facilitate a shift to a low-carbon economy?; Rationales, Philosophies, Business Models and Roles of GIBs; Target Sectors; Administrative configurations, leadership and reporting; Capitalisation and Funding; Instruments, Vehicles, Techniques, Tools and Interventions; Green Investment Banks and Institutional Investors; Domestic Policy Context and Green Investment Banks.

Guide to Banking and Sustainability, Edition 2. The report includes chapters on leadership, sustainability, risk, legal, corporate banking, retail banking, communications, human resources and general services. The report identifies options for banks and shares examples of real life practices related to the chapter topics. UNEP Statement of Commitment by Financial Institutions (FI) on Sustainable Development.

Land Degradation Neutrality (LDN) Fund. Mirova, an affiliate of Natixis Global Asset Management (with €8.2 billion of assets under management, initiated $300 million for responsible investing. Evaluation Report: Support to the development of the LDN Fund, February 2017

Using credit lines to foster green lending: opportunities and challenges, by Ian COCHRAN, et al. Green credit lines extended by public finance institutions are a financial intermediation tool with a twofold objective: fostering lending to projects with environmental benefits often referred to as “green lending”, and building capacity in local financial institutions to expand the green lending market after the credit line is closed. These credit lines may include advantageous financial conditions, such as reduced interest rates, longer tenors, increased grace periods or incentive payments. They may also include technical assistance aimed at building the capacity of local financial institutions to provide loans to green investment projects and/or building capacity of project developers to structure investment proposals. Credit lines are therefore not a “silver bullet”, but rather one component of a broader support package tailored to each market that may include such tools as guarantee schemes and insurance mechanisms. Moreover, challenges remain regarding the long-term contribution of this instrument to sustained green lending practices after the closure of a given credit line, the efficiency of funds’ utilization and the evaluation of its environmental performance.

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Pension funds and Sustainable Development Goals: Be smarter, speak louder, push harder!, by Jacqueline Duiker, Lucienne de Bakker and Bram van den Boogaard, Dutch Association of Investors for Sustainable Development, Utrecht, the Netherlands, November 2018. Fiduciary duty is seen as the most important reason to adopt the SDGs. Pension funds are slowly adopting the SDGs. Few responsible investment policies include the SDGs. Most pension funds focus on specific SDGs. There is room for improvement in using the SDGs as a criterion in responsible investment instruments. Embedding the SDGs remains challenging.