Harnessing the power of financial markets for public good

Mobilising institutional capital towards the SDGs and a Just Transition. This is the moment for institutional investors to move beyond their comfort zones, utilising and combining the instruments and tools that will enable them to deploy increasing amounts of capital into SDG investments in emerging markets.

Multilateral development banks (MDBs) and bilateral development finance institutions (DFIs) play a particularly important role in mobilising private capital at scale and this role should be encouraged and augmented, not only their needs, institutional investors themselves need to act for progress to happen at scale. Many of the barriers holding some institutional investors back can be overcome with existing tools and instruments, often used in combination.

Successful approaches and modalities need to be expanded so that more institutional investors can participate and deploy capital. Efforts can, in the first instance, be concentrated on dialling up the many effective existing structures. Perhaps the most promising is the increased use of guarantees and insurance coverage at a portfolio and vehicle level.

Concerted and coordinated action is now required by both asset owners and asset managers – and all the other actors that support them – to use existing, or create, pathways to enable institutional capital to flow at the scale and pace required to where it can have most impact. Regardless of different starting positions among asset owners and managers, everyone can – and needs to – do a lot more to meet the magnitude of the challenges confronting people and the planet. Current barriers to investment must not be an excuse for inaction – they now need to be a catalyst for engagement and, where needed, innovation. by the institutions themselves, but also by their shareholders.