The Development System is responding to the COVID-19 crisis, an important element of this will be further mobilizing the private sector. Development banks are important actors as they have the knowledge and balance sheets necessary to bring in the private sector at scale and impact. This panel will set out the key themes of the week, with a particular emphasis on Blended Finance and Impact. In particular, what are the key requirements to ensure a build back better approach. What are the obstacles both practical and policy and how can guidance and standards facilitate best practices. Moderator: Martin Wolf, Chief Economics Commentator, Financial Times

In September 2020, the Members of the OECD Development Assistance Committee (DAC) has approved the Blended Finance Guidance, a practical tool to support donors in the design and implementation of blended finance programs. The Guidance includes good practice examples and checklists to follow in order to put the Blended Finance Principles into practice. This session is the official launch of the Guidance and aims to foster a high-level discussion around the need to deliver high quality blended finance approaches to mobilise commercial investment towards SDGs in developing countries. Moderator: San Bilal, Head of Program Trade, Investment and Finance, European Centre for Development Policy Management (ECDPM)

There is strong consensus within the development community that blended finance is under-utilized to mobilize private investment for climate-aligned projects in developing countries. At the same time, governments are increasingly taking action to align policies and investment with climate objectives. This session will aim at discussing opportunities and challenges of using blended finance approaches for climate action in developing countries, in view of COP-26. Moderator: Liam Kennedy, Editor of Investment & Pensions Europe and Editorial Director, IPE

Guarantees have a number of benefits as a blended finance instrument. Unfunded guarantees can be particularly useful in situations with constrained budget. Guarantees both funded and unfunded have demonstrated significant mobilisation effects. OECD data indicate that guarantees mobilised more capital than any other financial instrument during 2012-2018 and have been the most effective tool for mobilising capital in every year for which data is available. Guarantees can bring financial additionality by changing the risk-return profile of investments and alleviate credit restrictions for underserved borrowers. Also, the cost of using guarantees are relatively low as guarantees are commitments to repay loans only in case of default. Yet, guarantees are not used to a large extend by development actors. Where used, guarantees constitute only a small fraction of portfolios and they are still applied in a limited number of geographical areas and market contexts. A fireside chat with a representative from OECD and GuarantCo will discuss guarantees on the basis of recent OECD work on the topic. Moderator: Haje Schütte, Senior Counsellor and Head of the Financing for Sustainable Development Division of the Development Co-operation Directorate, OECD

With the COVID-19 pandemic and its impact on developing countries there is a critical need to address both the immediate health emergency and the longer-term socio-economic consequences that developing countries will face in the protracted crisis. Development Finance Institutions (DFIs) and Multilateral Development Banks (MDB) have been major actors in the response to the crisis and have an opportunity to play an important role in the recovery phase. A Statement on the role of DFIs, MDBs and Shareholders in building back better in the wake of COVID-19 was drafted and published in November 2020 by a designated group under the Tri Hita Karana (THK) Roadmap on Blended Finance. The session will revisit the Statement and discuss perspectives and interventions of DFIs/MDBs/Shareholders under the COVID-19 pandemic. Moderator: San Bilal, Head of Program Trade, Investment and Finance, European Centre for Development Policy Management (ECDPM)

COVID-19 has set back the SDGs goals considerably, with unprecedented impacts in developing economies. As a result, the development community is more than ever looking to mobilize private finance in order to scale up for building back better in the COVID-19 era. In its latest report, the Global Investors for Sustainable Development (GISD) highlights a broad range of proposals and in particular the key regulatory barriers that need to be alleviated to allow the private finance sector and public sector to collaborate more effectively to unlock greater investments for the SDGs. This session will discuss some of the key recommendations underlined in the report and focuses in particular on the need to increase investment flows in developing countries to achieve the SDGs. Two fireside chats discussions will also be held to dig deeper into some of the regulatory constraints affecting pension funds and insurance companies as well as limiting the growth of SDG bond issuance in developing countries. Moderator: Robert Patalano, Acting Head of Division, Directorate for Financial Affairs, OECD Closing remarks: Navid Hanif, Director of Financing for Sustainable Development Office, United Nations (UN)

This session will discuss the forthcoming OECD Impact Standards for Financing Sustainable Development (IS-FSD) that are being developed by the Community of Practice on Private Finance for Sustainable Development (CoP-PFSD). During the session we will explore, with standard setters and from practitioners, the added value for donors and private sector partners of using common standards for impact measurement and management, in terms of seeking greater accountability and transparency on the impact of their investments. Moderator: Haje Schütte, Senior Counsellor and Head of the Financing for Sustainable Development Division of the Development Co-operation Directorate, OECD

This session will discuss the need for harmonisation of impact measurement and management practices, how organisations are responding to this challenge and the role of transparency in this process. Standard setting organisations will help us navigate the impact measurement and management space, to get a deeper understanding of how investors and corporates can build a strong impact measurement and management system, and be more transparent on the impact of their investments. Moderator: Priscilla Boiardi, Policy Analyst, Private Finance for Sustainable Development Unit, OECD

Moderator: Jorge Moreira da Silva, Director, Development Co-operation Directorate, OECD

Additionality is at the heart of blended finance interventions. We want to ensure that private investors are not crowded out of the market, and we also want to ensure a development impact beyond what would otherwise have occurred without the intervention. However, additionality is a challenging concept. It is being defined, interpreted and used differently by different stakeholders, and there is no common agreement on which methodologies to use when assessing and evaluating additionality, ex ante or ex post. This is a challenge for evaluators of blended finance interventions, and it is a challenge for institutions at the operational level to manage for additionality. It is also a political and strategic challenge for institutions involved in blended finance, as questions around additionality are at the heart of justifying the use of public funds for blended finance. The session will discuss different approaches and key challenges in understanding, assessing and evaluating additionality. An OECD EvalNet Working Paper “Evaluating financial and development additionality in blended finance operations” will be presented and followed by insights from EBRD, EIB and CDC on how institutions at the operational level are dealing with the challenges of assessing, evaluating and documenting additionality. Moderator: Magdalena Orth, Senior evaluator and team leader, German Institute for Development Evaluation (DEval)

The COVID-19 crisis is posing significant challenges as the climate investment gap is now expected to widen even further. As developing countries are now facing significant fiscal constraints due to the Covid-19 Crisis, the amount of domestic resources available for climate action is likely to shrink. However, the recovery also presents a pivotal opportunity for developing countries to ensure that stimulus packages support a transition towards low-emissions, climate-resilient economies. In addition, numerous challenges to mobilising private investment at scale to climate projects in developing countries continue to exist and development banks will need to continue to serve as important sources of climate finance in developing countries. As a result, the COVID-19 crisis and climate crisis are likely to require them to catalyse additional financial resources towards the achievement of the Paris Agreement. In light of COP 26, how could we accelerate the momentum towards the achievement of the Paris Agreement? How can development banks contribute to accelerate the green transition?

The COVID-19 crisis is further increasing climate investment gaps, with limited fiscal resources available in developing countries. As a result, there is an even greater need to mobilize institutional investors, to scale up climate-related investments in developing countries. Interestingly, institutional investors are also increasingly making bolder commitments on the climate front with a series of initiatives emerging such as the Net zero asset owner alliance convened by the UN. However, although institutional investors are increasingly looking for ways to tap into new investment opportunities that could deliver high returns, there are still numerous challenges to mobilising private investment to climate finance projects in developing countries in particular. This session will aim to highlight the key bottlenecks faced by institutional investors when investing in developing countries with a climate focus but also emphasize some of the key best practices and examples of climate investments that could be replicated across various developing countries. Moderator: Ulrika Åkesson, Lead Policy Specialist Environment and Climate Change, Chair of ENVIRONET, OECD

Balance Sheet Optimisation is a concept most often associated with commercial banks. It consists of a number of methodologies and tools designed to help them maximise their return on capital within the boundaries set by the prudential and regulatory frameworks they are subjected to. Transposed to the development finance context, where return on capital is in theory subordinated to developmental impact or absolute deployment levels as a proxy, optimisation remains relevant, particularly given the sector’s reliance on finite public funding and the herculean scale of the sustainable development challenge. While optimisation techniques, ranging from credit insurance and synthetic securitisation to secondary transactions and exposure exchanges can enable development finance institutions and multi-lateral development banks to adjust or diversify their risk exposure, dynamic allocation mechanisms can be brought to bear to more efficiently meet the demand for capital where it arises. Moderator: Thomas Venon, Founding Partner, Eighteen East Capital

The least developed countries (LDCs) are the furthest from achieving the Sustainable Development Goals (SDGs) . They are also likely to be hit the hardest by the COVID-19 crisis. Yet too little private finance is mobilised for investment in LDCs. This discussion will discuss blended finance strategies to get more and better finance in LDCs for a resilient COVID-19 recovery, building on the findings of the 2020 OECD/UNCDF report on Blended Finance in LDCs. Moderator: Paul Horrocks, Head of Unit for Private Finance for Sustainable Development, OECD