UNCDF at the UN Water Conference to foster innovative financing for Water
The UN 2023 Water Conference, which took place from 22-24 March at the United Nations in New York, has generated more than 700 commitments aimed at driving transformation towards a water-secure world. Around 10,000 participants gathered at UN Headquarters and online for three days of discussions to urgently scale up action to address the water and sanitation crisis, ensure equitable access to water and sanitation for all and encourage water cooperation.
UNCDF has been active at the UN 2023 Water Conference through many activities and engagements. Through the Blue Peace Financing Program, UNCDF positioned itself on a somewhat overlooked, yet most important issue: Financing for water and transboundary water cooperation. Indeed, appropriate funding and financing is currently lacking while they are pivotal for the Water Action Agenda and for the Sustainable Development Goals. Therefore, this is a topic to which we need to give more attention, to which we need to bring different perspectives and for which we need to encourage multistakeholder partnerships.
UNCDF commitment to the Water Action Agenda
Historically, transboundary water bodies had the potential of being a source of conflict. Due to its transboundary and multisectoral nature, the sustainable management of water resources requires the creation of transboundary and multisectoral cooperation frameworks. Such policy, legal and institutional cooperation frameworks can help reduce conflicts and contribute to peace. Access to financial resources can be a strong incentive for such cooperation frameworks. But the current financial ecosystem rarely enables transboundary and multisectoral investments. The way financing currently approaches water and related investments is overly national and sectoral. Major providers of water-related services like basin organizations and local governments lack access to capital. These entities are usually limited in their ability, including their access to financing, to successfully fulfill their mandate. Promoting access to public and private capital for these non-sovereign entities while strengthening their institutional capacities is crucial. Therefore, UNCDF has committed to contribute to these objectives, through a dedicated Financing for Water Program – the Blue Peace Financing Program. This program aims at developing and implementing financing solutions to unlock public and private capital for better access to water-related services for all, as well as for sustainable development and water cooperation, creating a peacebuilding impact on societies.
Roundtable on Financing for Water
UNCDF and the Swiss Agency for Development and Cooperation (SDC) have seized the great opportunity given by the conference to organize a Roundtable on Financing for Water to demonstrate how a multistakeholder partnerships and innovative programs such as the Global Blue Peace Financing Program can contribute to the Water Action Agenda objectives and beyond.
During the event, investors and donors showed their interest and committed to support the Blue Peace Financing Program. For instance, SDC has shared its intention to contribute with up to nine million USD ($ 9Million) for the program. Other donors and partners are invited to join this multistakeholder program and support UNCDF and its partners in its efforts to develop and implement concrete financing solutions for sustainable development, water cooperation and peace.
UNCDF side event at the UN Water Conference
Through a high-level panel titled “Invest in Sustainable Development and Peace through Water: Unlocking Public and Private Capital for Water and Transboundary Water Cooperation through Innovative and Sustainable Financing”, UNCDF, in partnership with SDC, the Gambia River Basin Development Organization (OMVG) and other partners, gathered speakers from the public and private sector, including government representatives, international organizations, and commercial finance sector stakeholders. The objective of this side event was to discuss how we can create new markets in the Sustainable Finance field to unlock public and private capital for sustainable development, water cooperation and peace.
The challenges when it comes to mobilizing funding and financing for transboundary water-related projects are huge as confirmed by the OMVG Secretary General, Mr. Daouda Samba Sow: “We are a strong institution with a long-standing history and strong political will and support from member states, but we face challenges when it comes to mobilizing funds. We thank UNCDF and SDC for accompanying us on exploring innovative financing instruments such as the Blue Peace Financing Initiative, to implement projects in the context of our masterplan. This is really the way forward to build financial independence whereby we can implement projects without getting indebted”.
The perspective of a River Basin Organization with a strong institution and a long-standing history such as OMVG was very important. The interventions from the commercial financial sector, including representatives from the SEB bank as well as the Intrinsic Stock Exchange, made the discussions even more meaningful.
The CEO of Intrinsic Exchange Group, Mr. Douglas R. Eger, affirmed that the value of natural resources such as water can be captured financially and hence become attractive for institutional and private investors if they are considered as an asset that would be converted into financial capital. The design of the instruments, be it debt or equity, need be fit for purpose around those natural assets.
Meanwhile, Mr. Benjamin Powell, Head of Sustainable Debt Capital Market, Skandinaviska Enskilda Banken (SEB), highlighted that financial services providers can support the creation of new markets in the sustainable finance field for sustainable development, water cooperation and peace with respect to key requirements: “We have to play our role as a communicator – a facilitation between the investor and the issuer, the entity that needs funding. In the case of the Blue Peace Financing Initiative, we have the impact and the financing needs. We need to communicate this together with the opportunity as well as the impact - while determining the success factors- to investors and that’s how we get them on board. It also goes the other way around: some investors express their wish to have exposure to the sustainable development goals. So as financial services providers we play the facilitation role, giving investors what they want in terms of impact and aligning their portfolio allocation and then to investment opportunities presented by issuers, by companies, by institutions like this Blue Peace Financing Initiative”.
Standards and frameworks are also essential for new sustainable and impact investing instruments and mechanisms. In addition to private investors, national governments, as regulators and donors have also to play their role in the creation of new markets in the sustainable finance field for water and transboundary water cooperation. “There is truly a political window that needs to be pushed and it’s all about trust which is also very strongly linked to de-risking. So, the main action from governments, from regulators and donors is to think about how this trust as a key issue can be created, promoted, and evaluated. From our perspective, there are some key elements for this evaluation:1) a transparent reporting according to standards, 2) an enabling regulatory environment with clear and transparent rules for investors, 3) Support to water utilities in their financial performance because this a credible business case” shared Dr. Tania Rödiger-Vorwerk, Deputy Director General, Federal Ministry for Economic Cooperation and Development (BMZ), Germany.
Blue Peace Bonds as a concrete example of creating new markets in the sustainable finance field
While the Deputy Director General of the European Commission, Ms. Marjeta Jager, presented the Blue Peace Financing Initiative as a Flagship Initiative under the Team Europe Initiative for Transboundary Water Cooperation, the UN Under Secretary-General, Ms. Usha Rao-Monari, highlighted that Blue Peace Bonds are a concrete example on how we can actually create a new a market in the sustainable finance field and provide an impact investment opportunity for institutional and private investors.
“In addition to public capital, blended finance and de-risking mechanisms are important if we want to unlock private capital for sustainable development and in particular water and water cooperation. And we are huge believer of the success. That’s why we are delighted to announce the contribution of the European Fund for Sustainable Development (EFSD+) for the Blue Peace Financing Initiative. This will strengthen the credit-enhancement mechanisms for the Blue Peace Bond via a first-loss structure of the Partial credit guarantee” shared Ms. Marjeta Jager, Deputy Director General, DG INTPA, European Commission.
The discussions clearly showcased that Blue Peace Bonds will change the way investors look at and invest in water, including transboundary water. It also confirmed that this innovative financing approach creates financial incentives for transboundary and multisectoral water cooperation, while creating a new market in the sustainable finance field.
UNCDF fully supports the Transboundary Water Cooperation Coalition (TWCC)
40 countries, regional integration and international organizations, international financial institutions, NGOs, academic and research centers have made a united call at the United Nations 2023 Water Conference to step up global efforts for transboundary water cooperation.
A joint statement delivered to the Conference plenary by the President of Slovenia Nataša Pirc Musar on behalf of the Transboundary Water Cooperation Coalition, warned that “cooperation in most transboundary basins is not adequate to deal with future challenges, and progress is too slow”, calling for “increased ambition of the world’s efforts in this area”.
UNCDF has a clear vision on that: a world where affordable and safe access to water-related services, from WASH to agriculture and energy, is provided to all, and where water is a vector for cooperation and peace, inclusive societies as well as economic and sustainable development, while water resources are managed in a sustainable, equitable and integrated way. Through its Blue Peace Financing Program, UNCDF is committing to this vision and will continue working with its partners towards unlocking public and private capital for better access to water-related services and to transform transboundary water cooperation frameworks into investment platforms through innovative blended finance mechanisms and financing instruments, such as Blue Peace Bonds.
At the side event organized by the TWCC “Committing to advance transboundary water cooperation worldwide for sustainable development, climate action, stability and peace”, our Officer in Charge shared that “UNCDF is committed to concrete solutions on Financing for Water as a true “gamechanger” and has been actively engaged in this field, also as proud member of the Transboundary Water Cooperation Coalition”.
UNCDF at the CEO Mandate side event
During the side event titled "Financing our Water Ambitions: Leveraging Corporate Investments to Enable the Open Call for Water Action," the CEO Water Mandate’s Water Resilience Coalition launched its Investment Portfolio committing to invest in 100 of the most water-stressed basins globally. UNCDF presented the Blue Peace Bond as great investment opportunity to fulfill this commitment.
UNCDF, through the Blue Peace Financing Program, has been featured in many media outlets to showcase the needs for innovative financing for transboundary water cooperation, sustainable development, and peace.
Impact investor: https://impact-investor.com/uncdfs-blue-peace-bond-opens-new-investment-horizons/
CNBC Africa: https://www.cnbcafrica.com/media/6323419676112/
Swiss Foreign Affairs Department: https://www.youtube.com/watch?v=la-d0mChLaU