The roundtable, hosted by the DAC Network on Development Evaluation, will discuss how blended finance, and its associated terms such as additionality and impact, are defined and used by different actors, as part of an ongoing study to map these differences and consider their implications for evaluating the development results of blended finance. This study is part of the OECD's DAC Network on Development Evaluation (EvalNet) work, led by DANIDA (Denmark), Deval (Germany), and Norad (Norway) to address the evaluation challenges related to blended finance.

In 2015, global leaders committed to the 2030 Agenda, sending a strong signal that reaching the SDGs was only possible with the help of private finance. Half a decade later, although private finance for sustainable development has increased, hundreds of trillions of capital continues to be allocated to unsustainable and climate-incompatible activities. This panel will take stock of the progress made towards mainstreaming sustainable finance, identify the main obstacles to alignment and discuss the incentives needed to shift public and private funds towards sustainable development in developing countries.

Assessing alignment of private financ with sustainable development: two different perspectives

Digital finance can ease the delivery of, and access to, financial services, with major impacts on financial inclusion in developing and emerging countries. Financial innovation has great potential for efficiency gains, better accountability systems and increased transparency. There are also risks, however, such as the proliferation of fraud and illicit financial flows, as well as aggressive pricing and screening. And it is not automatic: financial innovation may be hindered by poor digital infrastructure, weak investment climate and complex governance systems. This interactive session will invite experienced innovators to discuss the potential for digital technologies to improve the alignment of finance with sustainable development.

SDG 8 promotes “sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”. The fact that 30 million African youth are expected to enter the labour market every year by 2030 makes this one of the most pressing challenges facing sustainable development. Beyond employment creation, SDG 8 also calls for reducing informal employment, narrowing the gender pay gap and improving working conditions. How can development finance institutions and private actors work better together to direct investment towards SDG 8 while aligning with countries’ national priorities? How can they promote quality employment creation in developing countries? And how can they measure the direct and indirect impacts of their investment on the quantity and quality of jobs created?

Many private finance approaches for gender equality and women’s empowerment (SDG 5) come together under broad definitions of gender lens investing (GLI) and social impact investing (SII). GLI links commercial investors and private asset managers with gender equality outcomes through a range of instruments. Publicly listed GLI for example channelled an estimated USD 2.4 billion globally to private companies in 2018, while a scan of private equity and venture capital GLI found 58 funds with USD 1.3 billion invested as of 2017. According to the OECD 2018 Survey on Blended Finance Funds and Facilities, 55% of funds and facilities were aligned with SDG 5, up from 35% in 2016. This session will build on recent OECD analysis on financing for gender equality and women’s empowerment in developing countries and present promising case studies to better align private finance with SDG 5.

The ocean is the planet’s main life support system; highly interconnected to all terrestrial ecosystems and the climate. More than 3 billion people rely on it for their livelihoods worldwide, and an expected global population of 9 billion by 2050 will require producing more food, energy and jobs from the ocean. For developing countries, ocean-based industries are key sources of income and drivers of economic growth. However, emerging evidence suggests that SDG14 is among the least financed. Building on emerging evidence from the OECD and the High Level Panel for a Sustainable Ocean Economy, this session will provide a space to discuss current challenges and opportunities to align finance to life below water.

Aligning all financial flows with low-emission, climate-resilient development is a central objective of the Paris Agreement, and it is now clear that to realise sustainable development, public and private finance needs to address the climate emergency. As we enter 2020, dubbed by many as the global ‘use it or lose it’ year, a step change is needed in aligning finance with climate objectives and making the right investment decisions. Building on findings of the OECD report ‘Aligning Development Co-operation and Climate Action: The Only Way Forward’, this session will provide a space to take stock of international and country-level efforts to align private finance with the objectives of the Paris Agreement in developing countries, assess progress to date, and explore opportunities to increase impact and accelerate action.

In 11 years from now, we will be held accountable for our promises. It is time to act. We know where to go, but a significant gap between intentions and action remains. What will it take to set a new course towards more sustainable development in countries most in need?