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Road to Belém | UNDP’s plan to mobilise sustainable finance · Trade Treasury Payments

• 0:05
  SPEAKER_00: The success of this cop is absolutely critical.
• 0:11
  SPEAKER_00: And part of the success lies in an agenda being taken forward which will truly bring finance behind climate ambition.
• 0:26
  SPEAKER_01: Welcome to Trade Treasury Payment, the podcast unlocking the feature of cross-border finance from transaction banking and money movements to liquidity, treasury, and cash management.
• 0:38
  SPEAKER_01: We bring you expert insights and the latest trends shaping global finance.
• 0:44
  SPEAKER_03: Welcome back to the Trade Treasury Payments Podcast.
• 0:46
  SPEAKER_03: I'm Carter Hoffman, Trade and Technology Header at TTP.
• 0:50
  SPEAKER_03: Today we're going to be talking about sustainable finance and some of the work underway to align public and private capital with real development priorities on the ground.
• 0:58
  SPEAKER_03: And with COP30 and Bellum just around the corner, the timing couldn't be better.
• 1:02
  SPEAKER_03: So to help guide us along, I'm very pleased to be joined today by Tom Belo, the director of the UNDP Sustainable Finance Hub.
• 1:09
  SPEAKER_03: So, Tom, welcome to Trade Treasury Payments.
• 1:12
  SPEAKER_00: Thank you very much, Cars.
• 1:14
  SPEAKER_00: A pleasure to be here.
• 1:16
  SPEAKER_03: Thank you.
• 1:17
  SPEAKER_03: Yeah, so why don't we just start off with a bit of an introduction about you and your role?
• 1:22
  SPEAKER_03: So can you tell us a little bit about what the UNDP Sustainable Finance Hub actually does and more specifically what your role within that is?
• 1:31
  SPEAKER_00: Of course, yes.
• 1:32
  SPEAKER_00: Thanks for the opportunity.
• 1:34
  SPEAKER_00: So, well, as you know, UNDP is a development institution that operates across 170 countries of the world with a focus, of course, on development in emerging and low-income economies and countries.
• 1:53
  SPEAKER_00: And the sustainable finance hub's role within UNDP is to look to identify the ways in which we can help leverage, align different sources of finance with those development ambitions of our emerging country partners.
• 2:13
  SPEAKER_00: We use the SDGs as our metrics and goals in terms of our ambition on financing for the SDGs.
• 2:24
  SPEAKER_00: And my role as the director of the Sustainable Finance Hub is to help curate UNDP's work on sustainable finance across the 170 countries, but also develop the partnerships with financial institutions and the private sector and other international organizations that we need to be able to deliver on responsibilities for working in those developing economies.
• 2:53
  SPEAKER_00: So hopefully that gives you a little bit of a taste of who we are and what we do.
• 2:58
  SPEAKER_03: Yeah, and of course, given all that, COP 30 is just around the corner from when we're recording this right now.
• 3:04
  SPEAKER_03: So why does this moment in particular matter for the global sustainable finance agenda going into that conference and all of the conversations that are going to be held there?
• 3:15
  SPEAKER_00: Yeah, well, this COP in Bell M is really a COP that is focused on implementation.
• 3:23
  SPEAKER_00: It's focused on turning talk to action.
• 3:26
  SPEAKER_00: For us all, the success of this COP is absolutely critical.
• 3:33
  SPEAKER_00: And part of the success lies in an agenda being taken forward, which will truly bring finance behind climate ambition.
• 3:47
  SPEAKER_00: And I think you're aware that the COP is really now a staging point where the third generation of nationally determined contributions are being agreed, launched for developing and developed economies.
• 4:03
  SPEAKER_00: And those NDCs need to have a level of ambition that is going to keep us close to that 1.5 degree rise.
• 4:14
  SPEAKER_00: And for them to be ambitious, they have to be investable.
• 4:19
  SPEAKER_00: They have to have finance behind them for really us to be able to turn paper into reality, into concrete action.
• 4:30
  SPEAKER_00: So a large focus in BellM is actually on the Baku to Bellem roadmap, which came out of the previous COP, which was a roadmap towards the$1.3 trillion that needs to be invested in climate action annually by 2035.
• 4:49
  SPEAKER_00: The government of Brazil has put together a report together with the Circle of Finance Ministers, which is a mechanism that was created for Baku to Belem for the implementation of the agenda.
• 5:03
  SPEAKER_00: There's all sorts of other financial dimensions to the COP.
• 5:06
  SPEAKER_00: There's the Tropical Forests Forever Facility that's just been launched yesterday.
• 5:12
  SPEAKER_00: So yeah, it's really a finance COP.
• 5:14
  SPEAKER_00: And the final point I would say about it is it's exciting that Brazil has convened the circle of finance ministers around this agenda and put in place the Tropical Forest Forever facility because these are genuinely finance-led initiatives to deliver on the ambition of COP.
• 5:36
  SPEAKER_00: And that's different to the past.
• 5:37
  SPEAKER_00: In the past, it's been primarily, and it's still importantly, an environmental, a climate conversation.
• 5:44
  SPEAKER_00: Ministries of environment and climate experts and climate organizations have convened, but now we're seeing how finance is being brought in.
• 5:55
  SPEAKER_00: And that's critical for it to be implementable.
• 5:58
  SPEAKER_03: And on that financing side, I know there's conversations around that$4.2 trillion annual SDG financing gap.
• 6:07
  SPEAKER_03: So I guess from your perspective, how realistic is that$4.2 trillion number, first of all?
• 6:14
  SPEAKER_03: And then secondly, what is the UNDP doing to help countries overcome that amount?
• 6:22
  SPEAKER_00: Yeah, it's achievable the 4.3 trillion financing gap being closed.
• 6:28
  SPEAKER_00: And it's achievable, obviously, because the global wealth that we see in the world today far exceeds that financing gap.
• 6:39
  SPEAKER_00: I think it's now at something like, well, it's over$400 trillion of global wealth.
• 6:45
  SPEAKER_00: If we could somehow monetize just a percentage of that per annum, you've got it.
• 6:50
  SPEAKER_00: You filled your gap.
• 6:51
  SPEAKER_00: Of course, it's harder than just filling a gap because the point is the system is working in a way that doesn't deliver finance to the sectors or geographies that need it most for us to achieve the SDGs.
• 7:10
  SPEAKER_00: We see continued investment in fossil fuels from commercial banks.
• 7:14
  SPEAKER_00: That's clearly going in the wrong direction.
• 7:16
  SPEAKER_00: Fossil fuel subsidies are still a large part of government's own investment.
• 7:23
  SPEAKER_00: And we see that the cost of capital for many developing countries and emerging markets is still so high that they simply cannot access capital markets, international capital markets, for sourcing the finance they need for their sustainable development.
• 7:39
  SPEAKER_00: So we do need to look at those systemic issues, not just the gap, the 4.3 trillion gap.
• 7:45
  SPEAKER_00: But we're seeing some of the changes that we need to see.
• 7:50
  SPEAKER_00: I've mentioned the negatives, if you like, the fossil fuel investment, but we also know that in 2024, investment in clean energy reached the$2 trillion mark.
• 8:02
  SPEAKER_00: That's huge.
• 8:03
  SPEAKER_00: We've seen that the cost of solar is a fraction of what it was and is actually a fraction of the cost of energy from fossil fuels.
• 8:13
  SPEAKER_00: So we've seen, I think, a change in the system is taking place.
• 8:20
  SPEAKER_00: It needs to happen faster and it needs to be more robust and uniform.
• 8:25
  SPEAKER_00: But the gap can be filled as long as we can achieve those changes in the system that I'm articulating.
• 8:33
  SPEAKER_00: I mean, UNDP, because you asked the question, I mean, UNDP's role is critical.
• 8:42
  SPEAKER_00: We are a development institution, we are not a financial institution, right?
• 8:47
  SPEAKER_00: So I like to say that we bring sustainable development to financial reform and to financial transactions in a way that enables finance to be aligned and leveraged for sustainable development.
• 9:01
  SPEAKER_00: I'll give you like a few examples.
• 9:03
  SPEAKER_00: We've uh over the last few years really scaled up our support on bond markets to sovereigns issuing sustainable development or sustainably sustainability-linked bonds.
• 9:17
  SPEAKER_00: And this is really a partnership between us as the development institution and financial institutions.
• 9:24
  SPEAKER_00: It could be the multilateral development banks, it could be commercial banks.
• 9:29
  SPEAKER_00: And what we do is we look at how to frame the use of proceeds generated from the issuance of a bond around the development priorities of the respective sovereign that's issuing the bond.
• 9:45
  SPEAKER_00: We put in place the monitoring frameworks and reporting frameworks for reporting on the use of proceeds in relation to that bond.
• 9:55
  SPEAKER_00: And the financial institutions focus on what they should focus on, which is the financial transaction itself.
• 10:01
  SPEAKER_00: And it's this sort of fusing of capacities and mandates across financial institutions and development institutions, which I think really demonstrates the potential of re-jigging a system that isn't working to one that is working for people and planet.
• 10:20
  SPEAKER_00: We do similar work with ministries of finance on their budgets.
• 10:25
  SPEAKER_00: We also work with the private sector to identify opportunities for investment that deliver on financial returns, but also on development returns on the SDGs and different sectors in the developing world.
• 10:38
  SPEAKER_00: So that's a sort of flavor of what we do and hopefully how it contributes to a shift of the system that we need to try and materialize.
• 10:49
  SPEAKER_02: Hey, enjoying this podcast, hit that follow button for more.
• 10:54
  SPEAKER_02: Done.
• 10:54
  SPEAKER_02: Let's get back to it.
• 10:57
  SPEAKER_03: So on that note, for some of those banks or institutional investors that you're talking to or that might be listening to this, what does for them aligning with those SDGs and climate goals actually look like in practice?
• 11:11
  SPEAKER_03: Kind of tying it in from that financial perspective with the development piece that you were talking about?
• 11:18
  SPEAKER_00: One of the areas that we all need to look at very carefully is cost of capital and perceived risk.
• 11:26
  SPEAKER_00: And, you know, everything that UNDP does, not just my sustainable finance out, but everything that UNDP does, is to de-risk economies, sectors, specific transactions so that the private investors can come in.
• 11:43
  SPEAKER_00: And let examples of that could be, you know, our work to policy de-risk, to lower perceived risk due to volatility, the perception of volatility of policy.
• 11:57
  SPEAKER_00: We were talking about copper a minute ago and NDCs.
• 12:01
  SPEAKER_00: If countries have nationally determined contributions in place that are investable, meaning they're robust in terms of the policy priorities that they frame, but they go to a level of granularity at the sector level where investors can see, aha, so this is the direction of travel in this country.
• 12:24
  SPEAKER_00: This is giving me some certainty around the sector that I could invest in.
• 12:30
  SPEAKER_00: If we can bring that policy de-risking support to the investment community, I think that can help in lowering the perception of risk.
• 12:40
  SPEAKER_00: I often put it in the flip side.
• 12:41
  SPEAKER_00: If development organizations like UNDP were not in the developing countries where private international investors might be looking to invest, I undoubtedly think the perception of risk would be higher.
• 12:57
  SPEAKER_00: And it's by having a relationship with government, by being able to broker a discussion between investors and government that UNDP can add value the most, I think.
• 13:08
  SPEAKER_00: But more specifically, we do work in a number of countries to look at ways in which we can develop bankable projects for private investors that otherwise they wouldn't necessarily identify.
• 13:24
  SPEAKER_00: And I could give examples.
• 13:26
  SPEAKER_00: For example, in Nigeria, we worked to identify a series of bankable projects in medium and small enterprise that were involved in the health sector and brought these bankable projects to the investment community through a series of convenings, resulting in investments and a pipeline of, I think, over$100 million.
• 13:54
  SPEAKER_00: Now it's small,$100 million in the$4.3 trillion gap that we're talking about, but it's huge for the MSMEs concerned.
• 14:04
  SPEAKER_00: And in this case, these were women-led MSMEs as well.
• 14:08
  SPEAKER_00: The investments generate the financial return, of course, but the development return is huge.
• 14:16
  SPEAKER_00: And obviously for UNDP, that's critical.
• 14:20
  SPEAKER_00: A final, just as an example, because as you can tell, I can bang on for hours.
• 14:24
  SPEAKER_00: But another example of the way in which our work, I think, helps bring some credibility to investing in the SDGs from the private sector side.
• 14:36
  SPEAKER_00: We do a lot of work on SDG impact management and measurement, helping enterprise who want to demonstrate an impact on the SDGs to do so through adjustments in their management systems and monitoring systems that are credible to then report on impact in the SDGs.
• 14:57
  SPEAKER_00: And just as a note, we will be working, well, we are working with the International Standards Organization to roll out this management system standard that we've developed.
• 15:10
  SPEAKER_00: And of course, that has huge potential to bring some credibility, but as I keep saying, but also a sort of level playing field to the private market on how to report on SDG impact.
• 15:26
  SPEAKER_00: I'll stop there, Carter.
• 15:28
  SPEAKER_03: So you've talked a lot about public funds and bringing more of that private money into the America to fill these gaps and promote some of that development.
• 15:37
  SPEAKER_03: How do we make sure that a lot of that money is not just operating in silos, so to speak?
• 15:43
  SPEAKER_03: It's getting channeled in the right directions at the right time all the time.
• 15:48
  SPEAKER_03: I suppose the question is how do we make sure that everything's coming together and working together towards achieving this ultimate goal that we want to achieve, which is better development?
• 15:59
  SPEAKER_00: It's a great question.
• 16:00
  SPEAKER_00: It's a very timely question because, as you may be aware, Carter, the governments of the world met in Sevilla at the end of June, beginning of July this year, and agreed by consensus, an intergovernmental agreement across member states on financing for development.
• 16:25
  SPEAKER_00: And the outcome of that meeting, the agreement, which was called the Compromiso de Sevilla, the Sevilla Commitments, is a comprehensive set of measures that need to be taken by the international community and by member states, by countries themselves, to be able to, as you've put it, ensure that we're not looking at this piecemeal, we're not looking at sort of areas of excellence and then ignoring the other areas where attention is needed.
• 16:57
  SPEAKER_00: And associated with that global agreement is a really important measure that was agreed around country-led approaches to financing sustainable development.
• 17:10
  SPEAKER_00: And we live in an era now, as we all know, where, for obvious reasons, there are interests in trade and in investment that need to be brought to bear on discussions of development.
• 17:26
  SPEAKER_00: We're seeing how governments with scarce resources across the world are having to explain to their citizens how their tax dollars are being used for development in ways that also promote trade and investment.
• 17:44
  SPEAKER_00: Now, that's a reality, but it does lead to a focus on transactions and deals.
• 17:51
  SPEAKER_00: And many developing countries around the world struggle to put in place the policies, the capacities, the institutions that will ensure those deals truly deliver on national development priorities.
• 18:08
  SPEAKER_00: So out of Sevilla, there was a commitment across governments of the world to support these country-driven level approaches to financing.
• 18:15
  SPEAKER_00: And UNDP is supporting governments to put in place integrated national financing frameworks, which are basically the set of policies and institutions you need to be able to negotiate those deals that will truly deliver on your own development and not just the interests of those providing the finance for those deals.
• 18:39
  SPEAKER_00: So it was great that we had the meeting in Sevilla earlier this year.
• 18:43
  SPEAKER_00: Of course, we want to see the meeting in Bell M next week, continue a consensual agreement around finance, in this case, around climate action.
• 18:53
  SPEAKER_00: And I've already mentioned the Baku to Bell M roadmap is a vehicle around which hopefully that consensus will form.
• 19:00
  SPEAKER_03: Yeah, so given all that progress and momentum coming out of Sevilla, if we were to sit down and have this conversation again in a week's time when COP30 is over and done, what kind of outcomes from that would you say would have made it a successful event?
• 19:18
  SPEAKER_00: It's a good question.
• 19:20
  SPEAKER_00: We're all hoping that we will be able to get to an agreement across member states on the priority actions coming out of Bell M.
• 19:30
  SPEAKER_00: I think, again, the level of ambition of nationally determined contributions is on the line in Bell M.
• 19:39
  SPEAKER_00: As I said, the third generation now.
• 19:42
  SPEAKER_00: And if we don't get those NDCs to be at a commensurate ambition with the 1.5 degrees centigrade, we've missed a critical opportunity.
• 19:53
  SPEAKER_00: I hope also that ministers of finance, like in the mechanism I mentioned, the Circle of Finance Ministers, can continue to discuss the operationalization of the Baku to Belem roadmap with serious measures in place for the role of ministries of finance in investing in and attracting investment to nationally determined contributions.
• 20:19
  SPEAKER_00: I think, again, the Tropical Forest Forever facility that I think capitalized$5 billion of investment yesterday, or at least was announced yesterday from across governments, is already a sign of some of the success in securing commitments to financing, in that case, a truly innovative mechanism for financing the arrestation of deforestation across the world.
• 20:49
  SPEAKER_00: As long as the ambition of NDCs is high, as long as we continue to get commitments around the finance part of the agenda, Baku to Bell Lem, and we get agreement at the end of next week, then I think we would be going in the right direction.
• 21:05
  SPEAKER_03: Looking past just the next week and even the next few years, trying to look maybe five, 10, 20 years down the road, what are some of those long-term ambitions that you would like to see on the sustainable development front worldwide in bringing more of these countries to an increased level of development?
• 21:27
  SPEAKER_00: Moving from Bell M into your 10 to 15 years from now, I think one of the tilts in conversation that we hope to have achieved by them, but I'm very confident we will have, and we've started this already, is how climate and economic growth, climate action and economic growth, are mutually reinforcing.
• 21:52
  SPEAKER_00: I think we're seeing the tilt already on this investment in clean energy.
• 21:56
  SPEAKER_00: That's just going to continue to rapidly rise.
• 21:59
  SPEAKER_00: And the investment in fossil fuel, although it's too slow to decrease, will continue to decrease because of arguments of growth, not just climate action.
• 22:08
  SPEAKER_00: And I think that's going to have a big impact on financing for development more broadly, if we can ensure that the transitions that we're putting in place now are just and equitable.
• 22:22
  SPEAKER_00: And perhaps another area that I would hope we see moving into the next decade, that we don't look at climate as distinct from the broader agenda of development and inclusive development.
• 22:42
  SPEAKER_00: These are part and parcel.
• 22:44
  SPEAKER_00: I think one of the exciting things about the Tropical Forest Forever facility, financing facility coming out of Bell M is its 20% earmarked resource for indigenous peoples who, you know, so far have really not benefited from climate finance to the extent that they should have done.
• 23:04
  SPEAKER_00: It's a sign, I think, of how already there is an understanding that these the climate and inclusive development have to be forged together.
• 24:19
  SPEAKER_03: And so, with all that being said, just before we wrap up here, if you had a chance to get one message out to as many of the people attending COP30 next week as possible, what would that message be to get them to promote some of these agendas that you just talked about?
• 24:36
  SPEAKER_00: My message would be to focus on partnerships in BellM, to look to develop those partnerships across what have hitherto but increasingly less so been siloed.
• 24:52
  SPEAKER_00: I think as we come out of Bellem, if we get the level of ambition on nationally determined contributions right, then we then need to get the partnerships configured around those NDCs.
• 25:04
  SPEAKER_00: That means governments really learning the language of the financial sector and the private sector and taking full partnerships and conversations with those sectors, and vice versa.
• 25:18
  SPEAKER_00: I ask those from financial institutions and the private sector to invest in the time to have the conversations with government counterparts around how they can help, but also get the returns that they need by investing in nationally determined contributions.
• 25:39
  SPEAKER_00: So I really think those partnerships across financial, private sector, and public sector need to be forged at a whole new level, moving from Bellem.
• 25:49
  SPEAKER_03: There we go.
• 25:49
  SPEAKER_03: So partnerships, trying to get ways to bring more private investment into the space and really converting some of that talk into actual action for sustainable development.
• 26:00
  SPEAKER_03: Tom, thank you so much for being here.
• 26:02
  SPEAKER_00: Well, Carter, I wish I could have been there with you in person in Toronto, even though it's raining there, as you said.
• 26:09
  SPEAKER_00: But thank you so much for the time.
• 26:11
  SPEAKER_00: It's been a pleasure to join from New York and look forward to talking after Bellham and continuing the conversation.
• 26:18
  SPEAKER_00: For sure.
• 26:19
  SPEAKER_00: Thank you.
• 26:20
  SPEAKER_00: All right, Carter, thank you so much.
• 26:22
  SPEAKER_01: And don't forget to follow Trade Treasury Payment on your favorite podcast platform.
• 26:28
  SPEAKER_00: Thanks for listening.