As the world faces the deepest global health, social, and economic crises in a century, intertwined with the growing destruction of biodiversity, the worsening impacts of the climate crisis, increasing and intersecting inequalities, and threats to fundamental rights, we, the undersigned civil society organizations, call on Public Development Banks (PDBs)  to devote their considerable financial resources and influence towards building a just, equitable, inclusive and sustainable future for all.

The Covid-19 pandemic is only the latest example of the multifaceted crises our societies are confronted with. They must be addressed at the roots. The pandemic is likely to push an additional 150 million people into extreme poverty by 2021 and dramatically increase the many vulnerabilities faced by billions of people. Women and girls, as well as those experiencing the cumulative impacts of various vulnerabilities, will be most affected. The worsening climate crisis and accelerating decline in biodiversity, if unabated, will further intensify poverty and other vulnerabilities by 2030. Whatever the duration of the pandemic, the challenges the world is facing require global answers to be adapted to local situations.

This statement aims to highlight the important and interlinked issues that PDBs must address to provide a global response to both present and long-term challenges. PDBs should not repeat the errors of the past. They must seize the opportunity of the Finance in Common Summit to initiate a deep and rapid shift in the way they operate and place democracy, inclusiveness, equality, solidarity, and the common good at the core of their actions. Public money should only be spent in a way that promotes the well-being of people and the planet; not a single penny spent should contribute in any way to the violation of human rights, economic, social, and cultural rights, or of Indigenous people’s rights, nor should it allow for the destruction of nature, fuel the climate crisis or deepen climate injustice by supporting the industries most responsible for it.

Through strong participatory mechanisms with meaningful participation of civil society at all stages from the development of policies to the evaluation of their impacts, PDBs can create concrete avenues to ensure the respect of human rights and the promotion of community-led development. Their direct and indirect operations should promote resilience-building and the development of essential and good quality public services, support efforts to address corruption and tax avoidance, and adhere to the principle of “not harm” so that their financing does not undermine climate and environmental objectives, increase the burden of debt, or expand inequalities. To ensure accountability, the highest standards of transparency must be applied by all PDBs and all their intermediaries.

The current context is dire. Rapid response as well as longer-term countercyclical actions from PDBs are needed to mitigate the impacts of the Covid-19 crisis, especially for the most vulnerable and marginalized people. These efforts must be supported by countries providing the right mandate, policies and measures, and the necessary resources to public financial institutions.

We, the undersigned civil society organizations, believe that achieving the Sustainable Development Goals, limiting global warming to 1.5°C by fully implementing the Paris Agreement and protecting nature should be the key drivers of action over the coming decade. We call on PDBs to immediately and rapidly transform their policies and financing models by adopting and urgently implementing commitments to increase financing for just, equitable, and sustainable development; promoting and guaranteeing human rights for all, not leaving behind the most vulnerable and marginalized communities; and ensuring that all finance flows contribute to the development of low carbon and resilient societies, aligned with 1.5°C trajectories. Our demands are outlined in detail below.

RETHINKING DEVELOPMENT FINANCE AND RESPONDING TO COVID-19 TO ACHIEVE THE SUSTAINABLE DEVELOPMENT GOALS

1)    Increase and restructure financing for development

PDBs must drive a rapid transition to a model of development that builds resilient societies, responds to communities’ needs, and protects ecosystems. They must ensure that all their investments are consistent with these aims, including by earmarking a substantive amount to funding social protection systems, robust public health systems and to ensuring the right to food, water and sanitation, education, housing, and access to essential public services for all. This requires a change of course in most institutions. It means a stronger development mandate, followed by policies and monitoring mechanisms that ensure that the public interest takes precedence over generating financial returns and serving private interests.

Therefore, PDBs must:

• Adhere to the highest standards of transparency, provide public access to data, and engage in meaningful public consultation where their policy and decision-making processes are concerned. Their governance structures must include civil society representatives to enable greater levels of public oversight over, and increased accountability for the use of public development finance;

• Develop and improve transparency, monitoring, oversight, grievance, and accountability mechanisms to actively prevent PDB investments from undermining human rights. All PDBs must set up complaints mechanisms for affected or potentially affected communities and rights defenders to remedy or avoid any harm;

• Analyze the distributional impact of their programs to make sure that they do not aggravate or cause economic and social inequalities;

• Prioritize the scaling up of support for the public sector especially in the area of social protection, health care, water, sanitation and hygiene (WASH) and education. Such support should not be through privatization or public-private partnerships (PPPs); rather PDBs should devote more means to the strengthening of national revenue authorities in developing countries including by promoting fair, transparent and progressive taxation.

• Adhere to recognized development effectiveness principles for all initiatives, including blended finance, in which PDBs are involved. A binding framework with robust transparency and accountability systems must be established within PDBs to monitor the expenditure of blended finance and ensure that it delivers maximum value for the public interest, has a proven development impact and is coherent with the objectives of the 2030 Agenda and the Paris Agreement, while respecting fundamental rights;

• Align finance provided with individual country priorities which have been subject to extensive public consultation;

• Play a lead role in ensuring that civil society organisations have access to adequate, predictable, diversified and sustainable financing, recognizing their important role as development actors in their own right;

• Promote and participate in a permanent multilateral framework under UN auspices to support systematic, timely and fair restructuring of sovereign debt, in a process convening all creditors (including development banks);

• Implement strong tax policies that call for an end to cooperation with and financing of corporations and financing institutions engaged in tax avoidance and which are not being transparent on their operations, by publishing country by country reporting for corporations which receive public funding, and public declaration of their beneficial owners. PDBs must stop financing companies or intermediaries based in jurisdictions with limited transparency or low effective tax rates;

• Commit to supporting and investing in the social and solidarity economy, which has significant economic and job creation potential, especially at local or regional level (SMEs, health mutualities and cooperatives in all sectors) but is often constrained by the absence of adequate public or private funding.

2) Increase financing and strongly support a post-Covid-19 debt relief and financial sustainability initiative

Funding the SDGs and climate action were major challenges for developing countries even before Covid-19. The pandemic has negatively impacted domestic resources and countries’ capacities to meet basic needs of their population and to tackle the climate crisis. A new debt crisis is looming, with 44% of low-income countries in or at risk of debt distress even before the pandemic. Covid-19 has exacerbated levels of debt everywhere and particularly in the Global South, with countries taking on new lending to mitigate the effects of the pandemic even as public debt repayment obligations already prevent them from financing climate action. To avoid catastrophe both within low-income countries and globally, a major influx in public financing is required as part of Covid-19 recovery measures and to build resilience against future shocks. Therefore, it is crucial that PDBs:

• Scale-up finance to support developing countries to tackle the climate crisis and to achieve the SDGs. While developed countries are benefiting from increased financial means made available for example through the decisions of central banks, developing countries lack fiscal space to take similar measures and need significantly increased support;

• Provide finance through the most concessional measures possible, to prevent loans from further aggravating unsustainable debt levels in the near future;

• Do not promote austerity measures that will end up exacerbating the current crisis and jeopardizing future generations;

• Provide debt relief for these countries where there is outstanding and unpayable debt, while ensuring that any new lending is highly concessional;

• Support and, when their mandate allows, participate in a post-Covid-19 debt relief and sustainability initiative under UN auspices to bring developing country debt down to sustainable levels. Such an initiative must consider countries’ long-term financing needs to pursue the goals of the Paris Agreement and SDGs, as well as human rights and gender equality commitments, and consider specific country financing needs to comply with the Paris Agreement

ADOPTING RIGHTS-BASED APPROACHES

1) Center communities and human rights in all future development models

Sustainable development cannot be achieved without respect for human rights. Public development banks, as state-owned institutions, have the obligation to respect and protect human rights in their policies and operations. The principles of human rights-based and community-led development must be prioritized in post-Covid-19 recovery plans as well as in all other projects. In this regard, PDBs should commit to:

• Fundamentally shift how development is conceived and implemented so that human rights and local communities are at the center. Ensure full and free participation and respect the right to free, prior and informed consent for Indigenous peoples and local communities in all activities and projects;

• Develop innovative approaches to address the closing space, risks and challenges for communities, human rights defenders and civil society to meaningfully participate in decisions that impact their lives, livelihoods, environment and resources. Zero tolerance policies against threats and reprisals by PDBs and their clients should be a basic requirement;

• Work with local communities, social movements and human rights defenders to identify investments that are aligned with international human rights standards, climate protection, and SDGs, and reorient investments towards projects that respect these standards, while ensuring that the priorities and needs of vulnerable and marginalized people are met;

• Recognize the responsibility of PDBs and their clients and investors to respect and promote human rights, as set out in the UN Guiding Principles on Business and Human Rights. This includes clearly articulating how PDBs will promote and implement a human rights-based approach towards their stakeholders, clients and counterparts;

• Strengthen social and environmental requirements through inclusion of human rights standards enshrined in international conventions. Safeguards should ensure that activities financed directly or indirectly by PDBs respect human rights, do not contribute to human rights abuses, and contribute to equitable, inclusive development that primarily benefits those most in need;

• Require private sector clients or partners to respect and fully implement international human rights laws and high environmental standards, including as a requirement for access to blended finance;

• Develop common guidance for PDBs on ex ante human rights due diligence and participatory impact assessments in project investments and in support for economic reform policies or programs. This includes identification of contextual and specific risks, prevention and mitigation strategies, and remedy in line with international human rights norms. Ensure that these assessments are developed in close consultation with affected communities and are updated iteratively based on changing conditions

2) Respect the rights of Indigenous Peoples and include them in decisions

The Covid-19 pandemic has deeply affected many Indigenous nations and communities, causing an immediate threat to their existence and survival, as well as exacerbating the existing inequalities and human rights abuses that Indigenous peoples confront daily. It is crucial that PDBs respect Indigenous peoples as distinctive political and social entities. In so doing, their self-determination rights and collective land rights should be respected, as well as their rights to their cultural heritage, a healthy environment, sustainable development models, free, prior, and informed consent, and the right to participate in the development and implementation of policies and programs aimed to protect them and to build sustainable, resilient and equitable post-Covid solutions. To this end, PDBs must:

• Work with representatives of Indigenous councils and governments, as well as grassroots Indigenous leaders, who are legitimately elected by the communities they represent, to implement culturally and territorially appropriate development projects that include satisfying Indigenous peoples’ self-identified development needs;

• Respect the special relationship that Indigenous peoples have with their collectively held land when considering funding any project. Indigenous peoples are the best stewards of the environment, ecosystems, and biodiversity through protecting their lands, especially when they exercise full legal collective ownership of such lands. Therefore, PDBs must not support or fund projects that would convert Indigenous peoples’ collective property rights to individual ownership or projects that expropriate the lands of Indigenous communities. Furthermore, PDBs must respect and include Indigenous knowledge and practices as it pertains to conservation, sustainable development, and climate resistance and resilience;

• Include Indigenous peoples within the framework of their consultation protocols aimed at obtaining free, prior, and informed consent and follow the consultation protocols of Indigenous communities when and where they have been established. Given that consultation processes cannot and should not be realized in person during the pandemic, PDBs must respect this reality and allow for longer consultation periods through different mediums, respecting the communication preferences of communities;

• Recognizing the potential further harm to Indigenous peoples in isolation or recent contact within the context of the pandemic, no direct or indirect contact should be made with these peoples under any circumstances. This includes development projects and initiatives or mitigation efforts that would generate unwanted contact;

• Adopt a zero-tolerance policy regarding threats, attacks, and human rights violations against human rights defenders including Indigenous defenders within the scope of intervention, whether direct or indirect, of the financed projects;

• Protect Indigenous land and environmental defenders given the high levels of risk of retaliation faced by Indigenous defenders protecting their lands, territories, and natural resources to protect the environment from deforestation and poisoning of water and food sources; Include safeguard policies and monitoring mechanisms aiming to ensure the respect for the rights of Indigenous Peoples including reference to the UN Declaration on the Rights of Indigenous Peoples and the Escazú Agreement. These policies should be developed in consultation with civil society including Indigenous Peoples and local communities;

• Incorporate respect for the knowledge and customs of Indigenous Peoples in any promoted or supported health policies.

3) Commit to policies that are gender-responsive and rule out discrimination against sexual and gender minorities

PDBs should significantly increase funding for women’s rights and gender equality and adopt an intersectional perspective in all their activities. Indeed, programs that are essential for many women and girls – such as sexual and reproductive health and rights, or those focused on gender equality and empowerment, including in sectors such as agriculture, water, and forest management, local service provision, and supply chains – are chronically underfunded. The COVID-19 pandemic has exacerbated these trends and is further putting the health, safety, and well-being of women and girls at risk. PDBs should:

• Ensure that at least 85% of the entirety of their funding, in terms of volume, integrates gender as a significant objective by 2025, of which at least 20% is dedicated to projects with gender equality as their main objective. Equally, PDBs should ensure that they do not fund any gender-ignorant policies or programs;

• Increase funding towards gender-responsive public services and sectors that improve the well-being and livelihoods of women and girls and reduce their burden of unpaid care work, recognizing that women and girls are often the first to be disadvantaged when services are privatized or fees are charged for access to basic services;

• Rule out discrimination of sexual and gender minorities (SGMs). All PDBs must expand policies and staff training to counter discrimination against LGBTQ+ people and ensure they benefit from projects;

• Pay special attention to women’s economic justice and rights in the funding of the Covid-19 recovery. PDBs should support sectors and activities in which poor people and women make up a large share of the workforce, such as agriculture, health, textiles, tourism and local manufacturing;

• Promote women’s economic empowerment through entrepreneurship by investing in training on income-generating activity, facilitating women’s access to relevant investments, and promoting support mechanisms and interventions with positive impacts on decent work for women;

• Make sure that women have equal access to financial services, invest in innovative technologies aimed at fostering women’s access to financial services, and design financial services for the estimated 1 billion unbanked women, such as by providing guarantees for local financial institutions. Ensure that all financial institutions remove their existing discriminatory policies rules and regulations, ensuring women can access loans and funding regardless of their marital, family, or legal status; and tackle the social, cultural, and economic barriers that hinder women’s access to and control over financial resources and other assets.

ADDRESSING THE CLIMATE AND BIODIVERSITY CRISES

1) Ensure that all finance is climate-proof

To this date, PDBs from G20 countries have provided three times more finance for fossil fuels as for clean energy each year. The largest recipients of support for fossil fuels are not the poorest countries, and where fossil fuel finance does flow to lower-income countries, it typically benefits multinational corporations over local populations, while all too often violating human and Indigenous peoples’ rights, and causing displacement and degradation of health and the environment. At the same time, an increasing number of PDBs, including the European Investment Bank, are taking action to exclude fossil fuels from their financing. More institutions need to make similar commitments focusing on ending financing for coal, oils, and gas.

Recognizing that emissions from coal, oil, and gas already in production would push the world far beyond 1.5°C of global warming, we call on all PDBs to commit to:

• Increase the share of finance dedicated to climate action to assist countries in accelerating their chosen low-carbon development pathways and adapting to the impacts of climate change, while ensuring that all remaining funding does not undermine climate goals;

• By COP26, develop scientifically robust roadmaps for full alignment with the ambition of the Paris Agreement to limit warming to 1.5°C, and commit to encouraging clients and financial intermediaries to do the same;

• Immediately halt new support for fossil fuels and other electricity generation projects emitting more than 100g CO2/kWh and, by the end of 2021, phase out all support for fossil fuels already in the pipeline. This should cover associated facilities (from upstream to downstream) as well as all financial instruments and forms of support including advisory services, technical assistance, guarantees, budget support, and support through financial intermediaries;

• Prioritize supporting sustainable, renewable, and equitable solutions in power, buildings, and transportation, including but not limited to just and sustainable forms of renewable energy, energy efficiency savings, batteries and storage, interconnectors, smart-grid technologies, the electrification of heat and transport, and accessible public transit. The ending of financial support to fossil fuels would also free up funding that could be redirected towards essential public services that bolster resilience and enable adaptation to climate change;

• Rapidly scale up investments in universal access to affordable, reliable, clean, and sustainable energy by 2030. This finance should prioritize ‘high-impact’ countries, where access rates to electricity and clean cooking remain the lowest, as well as the mainstreaming of gender-responsive energy access, off-grid and mini-grid renewable energy into energy planning and targeted financing approaches;

• Support the implementation of just transition plans developed with affected workers and communities and provide transitional support for impacted workers and community members.

2) Catalyze climate-resilient societies

Developing countries and vulnerable communities need drastically scaled-up finance for adaptation projects and loss and damage. Research shows that the current scale of loss and damage requires “at least USD$50 billion a year by 2022, ratcheting up to USD$150 billion by 2025 and USD$300 billion by 2030”, and losses and damages are expected to get worse. Additionally, due to mitigation measures being seen as the most profitable, not enough climate finance goes towards supporting adaptation measures. As such, PDBs must:

• Scale up public finance for climate action for developing countries, while directing at least 50% of investments towards adaptation to address the global shortfall, focusing in particular on the most vulnerable communities;

• Provide climate finance in the most concessional way possible and ideally as grants, not as market-rate loans and other non-concessional instruments;

• Fully incorporate climate risk into PDB policies and operations;

• Ensure that all climate finance is gender-responsive and that at least 85% of climate adaptation funding also aims to achieve gender equality (based on OECD markers). At the same time, PDBs must significantly ramp up gender-responsive mitigation financing, and invest in women’s and girls’ education to foster participation and leadership;

• Provide new and additional finance to address ongoing losses and damages;

• Commit to common principles for integrating project-level and system-level adaptation into project appraisal cycles and broader strategies.

3) Adopt stronger and more consistent policies to slow biodiversity loss and protect sensitive, critical ecosystems

Overcoming climate change, preventing biodiversity loss, and suppressing zoonotic diseases are deeply intertwined and require holistic solutions. Despite recent progress, the international banking sector has yet to fully explore how biodiversity policies can improve the quality of their lending portfolios, while simultaneously avoiding negative health consequences and improving public confidence. PDBs have a crucial role to play in mobilizing resources and helping deliver the post-2020 Global Biodiversity Framework. We call on PDBs to:

• Set operational targets for biodiversity finance in their multi-year strategies, aligned with the biodiversity targets to be agreed upon at CBD COP 15;

• Categorically prohibit large-scale, industrial, or harmful direct or indirect financing in or near sensitive, critical ecosystems, including by respecting the fundamental rights of Indigenous peoples and local communities.

• Support capacity building, and influence policy and regulatory changes both at national and multilateral levels to eliminate harmful subsidies and to adopt improved planning and mitigation approaches for infrastructure development that result in the least potential conflict among people, water, and wildlife;

• Halt support to industrial agriculture or livestock operations which fuel new pandemics, biodiversity loss, and climate change, but instead support the transition to more sustainable and resilient agricultural practices, such as agroecology, and a shift to healthier, more plant-based diets;

• Develop and apply harmonized definitions and reporting guidelines for biodiversity finance across PDBs and biodiversity risks and impacts in strategic and operational decisions to support a transparent and accountable shift of financial flows and investments, public and private, to nature-positive investments.

• Include within their climate financing priorities those Nature-Based Solutions which observe the highest level of environmental integrity and promote community-led and gender-responsive approaches, to achieve mitigation and adaptation benefits from maintaining or restoring healthy ecosystems and establish a share of climate financing dedicated to this purpose.

[1]

The undersigned organizations refer to PDBs in this statement with the understanding that they include, but are not limited to, financial institutions such as multilateral and bilateral development banks, national development banks, and export credit agencies.