An integrated finance

framework for

sustainable development

Aaron Atteridge, Stockholm Environment Institute (SEI)

Paul Steele, International Institute for Environment and Development (IIED)

Key climate finance issues

Mobilising resources

Making more effective use of

available resources

Includes issues of how finance

is accounted

(towards ODA targets, towards

climate finance targets, etc)

• Support national visions for social and economic

development and sustainable environmental

custodianship

and sometimes also:

• Support international agendas (e.g. reducing global

warming)

What is finance for sustainable development

and climate change supposed to achieve?

Source: ODI, “Age of Choice”

Existing regime for delivering international public finance

finance

ministry

line

ministries

service

utilities

Bilateral C CC fund C

a b c

Bilateral

cooperation

Bilateral B

Multilateral

cooperation Global vertical

funds DFIs

Social impact

investment

Climate change

funds

CC fund B

Foundations CSOs

Non DAC citizens DAC citizens Private sector

Multilateral B

Challenges

Finance is highly fragmented at the point of delivery Finance is packaged as short term ”projects” Finance often does not connect with the needs of the poorest Allocation decisions on how funds should be used do not always reflect a

country’s or community’s most important priorities – role of fund committees in deciding what is appropriate at national level?

Evaluations of effectiveness are not looking at the quality and longevity of

impact

Encourages thinking of SD and CC as separate rather than integrated components of the development plan/pathway

Challenges

Weak governance and fiduciary risks in recipient countries reduces the willingness among funders to use country systems of planning and budgeting

Concerns over the emphasis on private finance and incoherence

of incentives

Principles of an integrated

sustainable development financing framework

An effective finance framework should:

• Maximise synergies, achieving both development and climate objectives

simultaneously

• Align the allocation of finance closely with national priorities

• Ensure benefits reach poor and vulnerable women and men

• Minimise transaction costs

• Support good governance and financial management

• Evaluate effectiveness against real change and long-term goals

• Facilitate partnerships (as a tool, but not an end in itself)

• Be transparent and accountable, both the funder and country

Moving from this….

finance

ministry

line

ministries

service

utilities

Bilateral C CC fund C

a b c

Bilateral

cooperation

Bilateral B

Multilateral

cooperation Global vertical

funds DFIs

Social impact

investment

Climate change

funds

CC fund B

Foundations CSOs

Non DAC citizens DAC citizens Private sector

Multilateral B

Climate

National budget

A J K B

C D

E F

G H

National development plan

SDGs

DRR

Public

financial

management

Funders

Domestic

finance

Domestic revenue

raising potential

(e.g. tax

collection)

Multilateral

Disaster Risk Reduction

To something like this?

”Mainstreaming into

national priority

setting process

Alignment of International finance with domestic priorities

= coherence, ownership Resources to achieve development and climate outcomes simultaneously

= synergies private finance with public sustainable development objectives

= coherence SDGs and CC with the planning and budgeting of the public sector

= “mainstreaming”

Effective use requires

an“integrated” finance framework

Thank you

Aaron Atteridge

aaron.atteridge@sei-international.org