An Innovative IFI Operating Model for the 21st Century

Nicole Pinko, Bella Tonkonogy, Vikram Widge and Barbara Buchner

June 6, 2023

2023 will be a critical period for implementing reforms to meet the scale and urgency of the climate crisis while also addressing the other crises facing developing countries—food and energy price inflation, debt sustainability, among others—as well as development priorities as targeted in the Sustainable Development Goals. The emerging markets and developing economies (EMDEs) most impacted by the rising cost of capital and the sovereign debt crisis are also some of the most vulnerable to climate impacts, making it difficult for them to find the financial and fiscal stability needed to make climate and transition investments.

International pressure and a leadership change at the World Bank have created an opportunity to reassess international financial institutions’ approach to climate, which needs to lead to a dramatic increase in the volume of finance that the international financial system deploys to meet climate finance needs. As shareholders look to reform the international financial architecture, it is important to consider not only where the additional capital will come from, but also how capital can be effectively spent for maximum climate and development impact.

CPI has developed three related resources to support international financial architecture reform efforts, with a focus on capital mobilization:

1. An Innovative IFI Operating Model for the 21st Century (Updated June 2023)

This paper lays out key products and processes that need to be introduced, reformed, and scaled to deploy effectively the existing and needed new volumes of climate finance to EMDEs. It builds on seminal reports such as the Finance for Climate Action (“Songwe-Stern”) report by zeroing in on the specific models that can be adopted and scaled with urgency, as well as discussions at the 9^th San Giorgio Group meeting, which CPI held in March 2023. The paper has been updated from the April 2023 discussion draft to reflect valuable stakeholder feedback.

read the updated paper here

2. Capital Mobilization Roadmap (Discussion Paper)

This consultation draft describes pathways—achievable over the next 18-24 months—for implementing some of the most promising risk-sharing instruments and business models described briefly in the IFI Operating Model paper, with a focus on mobilizing private capital. Not meant to be a comprehensive document, it focuses on four, high-impact instruments and initiatives that address credit risk; currency risk; development risk; and MDB incentives. Feedback welcome to framework@cpiglobal.org.

read the draft roadmap here