Global Public Goods and Development: the Vital Convergence of Two Ecosystems of Financing Players

Sébastien TREYER * Director General, Institut du développement durable et des relations internationales (IDDRI), Sciences Po. Contact: sebastien.treyer@iddri.org.

Financing global public goods, in particular climate action, is on the verge of being made part of the World Bank's official mandate. This is just the most recent development in a process of convergence between two financing ecosystems: the international ecosystem for financing development, established after the Second World War, and the more recent institutions established to finance the protection of the environment. This convergence process is both inevitable and necessary, but makes it necessary to take a detailed look into the risk that the focus on global public goods could come at the expense of social and economic goals. This paper shows that the institutions for financing development can align all their strategies and their entire portfolio with the Paris Agreement on Climate by making sure that they align with nationally developed long-term low emissions development pathways, thus avoiding trade offs between development and climate, and fostering transformative change in the spirit of Agenda 2030. This can serve as a model for other global public goods. But beyond dedicated development finance institutions, this paper also shows the necessity for a more thorough reform of the whole international financial system.

The accumulation of recent crises, including pandemics and the growing frequency of catastrophic climate-related events, has underscored the imperative to safeguard global public goods – such as global public healthcare, climate stability, and biodiversity conservation. It is essential to avert these crises and mitigate the associated risks, for all sectors of the economy in both industrialised and developing countries. The funding of endeavours aimed at preserving global public goods is justified on multiple fronts. Firstly, it is grounded in their intrinsic value, such as the inherent worth of natural ecosystems, which may not yield immediate material benefits but hold significant importance. Secondly, these investments are directly warranted as they serve as pivotal measures in mitigating the catastrophic risks that loom over all…