The Opportunity Of The Moment

Goal 17 Partners hosted the sixth in its series of webinars exploring the role of the private sector in solving pressing challenges facing society – the most urgent being COVID-19 and the pandemic’s social and economic consequences .

Moderated by Caitlin MacLean, Senior Director of Innovative Finance at the Milken Institute, the webinar — The Role of Sustainable and Innovative Finance in the Post-COVID-19 Recession — looked at how blended finance and other innovative financial tools mobilize private sector capital to ensure a robust and sustainable recovery. Blended finance is often defined as the use of philanthropic or pubic finance with private sector investment capital to address pressing social and financial issues.

Each of the panel participants saw optimism in a time of massive risk and with all of us experiencing challenges we never expected. As Courtney Leimkuhler, President of Springbank Collective said, “I am optimistic. It has been nice seeing companies step up and invest in society through expanded health care, paid time off, remote working options, and investments in childcare for employee families. We have a lot of good momentum right now, and it will be hard to put the genie back in the bottle.”

Jim Pass, Senior Managing Director, Guggenheim Partners and Michael Kashani, Global Head of ESG Portfolio Management, Goldman Sachs, both see an increased focus on ESG – particularly the “S” by investors, and that will continue going forward. Kashani noted that integrating ESG considerations is now becoming a fundamental strategy for investing. However, both Pass and Kashani noted there needs to be better accountability in ESG investing: increasingly investors want to see specific outcomes tied to an ESG investment strategy. 

To improve accountability, frameworks are crucial to measure and monitor how investment capital is deployed. Pass noted the work of Guggenheim and World Wildlife Fund to commission research on how standards to assess infrastructure projects are used by investors — and how they can be made more useful in guiding investment decisions. Building on that point, Kashani pointed out that good data is essential to both accountability and sound investment decisions.

David McCauley, SVP Global Partnerships and Multilateral Engagement for World Wildlife Fund, said he has been impressed with the greater integration of ESG criteria in public financing initiatives that have been implemented to address the global economic fallout from COVID-19.

“I am seeing a shift in the policies that have been developed in the last two months,” said McCauley. “Policymakers are actively thinking about how to incorporate social and environmental considerations into financing packages being put together by policymakers. That is a big change from the past when ESG was too often an afterthought.”

A Region at Risk

Despite the optimism expressed by much of the panel about the rays of opportunity that have come from society’s response to the pandemic, Mathieu Pegon, Head of Blended Finance at the Inter-American Development Bank, raised a significant point of caution: Latin America is facing the brunt of the pandemic at the moment, and the social and economic consequences for the region could be catastrophic. Latin America may see a decline in GDP by as much as 5 percent, which will trigger social and economic risks for years to come. 

Pegon argued that now is the time for both private and public finance to be brought to the market to help address the liquidity shortfall. Like the other participants, Pegon saw this as a moment of opportunity to further the integration of ESG considerations into how financial capital is deployed.

Looking Ahead

When asked by MacLean what they are most optimistic about in the face of an otherwise dire global situation, the panelists made a series of powerful observations. Jim Pass noted there has been considerable progress made in accelerating the application of transparent, accountable standards to guide the development of sustainable infrastructure projects. Courtney Leimkuhler said there is undeniable momentum to creating a “Care Economy” where workers enjoy greater support from employers around their health care, access to childcare, and flexible work options.

Both Kashani and McCauley noted that investors are accelerating the adoption of ESG criteria in investment processes across the public and private sectors. Lastly, and perhaps most importantly, Matthieu Pegon said that we finally have “not only an awareness but an acceptance of the value sustainability brings to society.”

You can view the full recording here.