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Public Development Banks Can Drive Sustainable Finance

Public financing will be key to building a climate-resilient future, but its potential is often overlooked. An upcoming summit offers an opportunity for public development banks to expand their influence and take advantage of post-COVID stimulus.

WASHINGTON, DC – A climate-resilient future requires public finance. But strong, long-term strategies for financing climate action have, so far, received little attention. One often-overlooked route to meeting this need is public development banks.

Much of the conversation about financing climate action focuses on multilateral development banks. Their role is crucial, but it is the world’s 450 local, regional, national, and subnational development banks that can drive ambitious climate policies on the ground and supply the bulk of global financing. Together, they account for $2 trillion in investment every year – about 10% of annual public and private investment around the world. Moreover, most of these funds are sourced and allocated domestically.

Rooted in the economies and societies in which they operate, these public development banks form a nexus connecting national and local governments and the private sector. They are well-placed to provide transformational support for sustainable practices and infrastructure by linking short-term needs with longer-term objectives. In effect, they represent the visible hand that can mobilize and direct finance toward common goals that are beyond the reach of the market for now.

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