Who is the Chairman of IDFC Bank
"We need more than multilateralism - we need polylateralism"
One of the first acts of US President Biden was to rejoin the Paris Climate Agreement and the World Health Organization. Are we entering a new phase of international cooperation and multilateralism?
Yes, I think we are at the beginning of a new era of connectedness and mutual relations between regions and between countries. This is a positive and hopeful signal. However, I think the term multilateralism is too narrow given the challenges we face. The economic, social and environmental challenges that lie ahead of us today are so great that we need a new form of governance, a broader approach that can do more than classic multilateralism.
Very interesting. What could that look like?
In order for us to get closer to the goal of a common world based on the Paris Climate Agreement and the United Nations Sustainable Development Goals (SDGs), we have to undergo a fundamental change in our economy and our society. In the face of these unprecedented challenges, states, regions, cities, institutions and citizens must embark on a new journey that I call polylateralism. Instead of acting unilaterally, bilaterally or multilaterally, we have to act simultaneously on all of these levels.
But wasn't that the basic idea of the United Nations from the start? The UN sets the standards, which are then implemented by the countries and other actors at all levels?
The United Nations sent a strong signal in 2015. A signal that spreads quickly and causes national and international agendas to be linked in an unprecedented way. The fact that we must all work towards the same goals means that the distinction between international and national must stop. And the pandemic has shown us once again how much we depend on cooperation. We need coordination at all levels in order to fight the virus and master the other major challenges of the 21st century, such as climate change, the loss of biodiversity, water scarcity, migration and digitization.
Is the IDFC - the International Development Finance Club - an example of this new direction?
In any case. In our club, 26 public development banks, including KfW and AFD, have come together to implement the international agenda of the Paris Climate Agreement and the SDGs. These institutions are determined to create a new force to help international organizations fuel investment in sustainable development around the world. We are committed to raising a total of $ 1 trillion on climate protection by 2025.
And from that came the Finance-in-Common-Initiative?
The Finance-in-Common Summit, initiated by the IDFC, is indeed the best example of polylateralism. We got together for our very first meeting last November. All 450 public development banks in the world were united in their will to contribute to the recovery and to align themselves with sustainable financing principles.
What is your vision for Finance in Common?
The finance-in-common movement has only just emerged. We now know that public development bank investments account for 10 percent of global annual investment (i.e. $ 2.3 trillion) and therefore have tremendous transformative power. We are already looking forward to the second Finance-in-Common Summit, which will take place in autumn, before COP 26.
For what specific purposes can development banks use their transformative power?
We now need to make our system more effective, more concrete and more collaborative. We need to provide support to address urgent challenges in 2021, particularly funding for Africa, health, climate and food security. We can also accelerate the transformation of our work processes and achieve more sustainability by developing and following common methods of reorientation and mechanisms for accountability. There is still a lot of work to do, but the vision and the ability to do it are there. Just take a look at institutions like KfW, which is now realigning its business activities to the SDG. I am aware of the important role KfW plays within Germany, the importance it has for general economic development, investments in renewable energies, energy-efficient living, etc. At the national level, it has a far greater impact than any international institution. And she shares her experience with the rest of the world through our colleagues at KfW Development Bank. In other words, we need strong national institutions working towards global goals. This is my understanding of SDG 17, which is precisely to revitalize global partnerships for sustainable development.
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