Infrastructure Financing and Sustainable Development
Think 20 Turkey Policy Brief
The following multipronged framework could serve as a starting point for G20 efforts to play an important direct and catalytic role in addressing pervasive infrastructure deficits in a more sustainable way:
• Implement country structural reform commitments, as embodied in growth plans. Twenty seven per cent of the G20’s two per cent growth target is expected to come from direct investment and infrastructure measures.
• Follow through on the commitment to establish the Global Infrastructure Hub in Sydney, to develop a knowledge-sharing platform, address data gaps, and develop a consolidated database of infrastructure projects connected to national databases, to help match potential investors with projects.
• Place a greater focus on sustainability in bank lending. The banking sector plays a critical role in financing infrastructure especially in the preparation and construction phases.
• Examine mechanisms to address commercial gaps such as partial risk guarantees, lines of credit or early-stage investment through public budgets, which can attract greater flows of private finance into Greenfield projects that are typically perceived as ‘high risk’, particularly those in developing countries.
• Place renewed emphasis on building the skill sets to evaluate data through sustainability-linked risk metrics, as well as improving project management capacities.
• Examine the effectiveness of investment frameworks such as strategic sustainable investing and sustainable and responsible investing, which rely on environmental, social and corporate governance analyses in order to generate long-term sustainable returns.
• Focus on innovation in the financial ecosystem that ensures ‘sustainability’ is a parameter at the project execution level, and particularly in the public sector institutions that account for over 60 per cent ($500-550 billion) of the total infrastructure financing in developing economies.
• Play a leadership role through country actions and in global discussions such as the Addis Financing for Development Conference, which includes sustainable infrastructure as one of its central pillars.