Sustainable Geneva’s first projects
This article was originally published in Le Temps, in French, on 30 September 2019. Translated with www.DeepL.com/Translator. The SDG Lab provides this translation for informational purposes only. Please consult the original article “Premiers projets concrets de la Genève durable” (paywall).
By Sébastien Ruche
Over the past eighteen months, Geneva has witnessed the emergence of a platform for exchange between development and financial actors, new developments in humanitarian finance and a stock exchange for social enterprises.
From 7 to 11 October, Geneva will host a week of conferences and events related to sustainable finance. Building Bridges Week is supposed to crown the rapprochement between the right bank of the city (that of the United Nations and NGOs) and the left bank (finance). In August 2018, we wrote that these communities had little interaction. Just over a year later, here is an update on the initiatives launched and strategies adopted.
Since June 2018, the worlds of development and finance have spoken to each other at least twice – through workshops during which about thirty proposals emerged. Among the three or four initiatives that have been put forward is the “Pipeline Builder”, which aims to identify development projects and see how they can be transformed into investment.
“The objective is to co-create projects that will make a difference for development, drawing on the expertise of different stakeholders, whether NGOs, the United Nations, academia, government or financial actors,” says Nadia Isler, Director of the SDG Lab, a UN entity responsible for finding concrete solutions to achieve the Sustainable Development Goals (SDGs) and which launched the creation of the Pipeline Builder.
Projects are discussed collectively, in order to identify a market or to think about ways to limit financial risk, while ensuring their impact on the implementation of the SDGs, adds the former Swiss diplomat in New York. “No one actor alone has all the answers.” The next step for the Pipeline Builder is to find funds to identify projects in different countries and validate the concepts.
We are therefore talking about partnerships, not just a simple incubation of projects, and above all about trust between worlds that do not fully understand each other, notes Nadia Isler, whose SDG Lab has also co-created the Geneva 2030 Ecosystem. This network of about 400 local actors involved in the implementation of the 2030 Agenda can be mobilized on specific issues, preferably by bringing together “unexpected partners”, adds Ms Isler, such as technology or environmental actors for a health-related problem.
Innovative humanitarian finance
Another initiative linking the two shores of Geneva, innovative finance continues to be explored by the ICRC. In July 2017, the International Committee of the Red Cross launched a first “humanitarian impact bond” in partnership with Lombard Odier and Munich Re, worth 26 million CHF to finance three orthopaedic centres in Africa. Depending on the number of people cared for and the level of productivity of these new centres, investors will recover their investment in 2022 and possibly interest proportional to the results. All this will be funded by the Swiss Confederation, Belgium, the United Kingdom, Italy and Fundacion la Caixa (7% per year if all objectives are met). If the project does not succeed, financiers could lose up to 40% of their capital.
ICRC is now evaluating other financing options for a water access project in Goma, Democratic Republic of Congo. It could be financed through a subsidy approach (if the sale of water does not repay the basic investment and covers part of the operating costs); or a hybrid model in which revenues cover the operating costs.
“Financial innovation must make it possible to provide additional financial resources, but also longer-term responses, with different partners,” says Juan Coderque, head of new financing models at ICRC. According to him, the actors of development, economy or governments have recently mobilized a lot to develop finance in a humanitarian context. “We have much work ahead of us. In the interest of beneficiaries, we must succeed,” concludes Mr. Coderque.
Since 2010, investments in impact bonds have amounted to US $408 million, according to Dealogic data reported in the Wall Street Journal. More broadly, social bonds attracted US $8.4 billion between January and August 2019, compared to US $13.4 billion in 2018 and US $2.4 billion in 2016.
Nasdaq of social enterprises
Still in Geneva, the SwiSOX social enterprise exchange project (for Swiss Social Stock Exchange) aims to enable small and medium-sized enterprises that respond to environmental or social issues to be listed and able to issue bonds. “Market research has been carried out, [and] we recently obtained funds from a foundation in the Lake Geneva region to recruit a project manager. [This individual] will verify the reality and potential of the future stock exchange, in particular by looking for companies that are committed to listing and trading,” describes SwiSOX's promoter, Bertrand Gacon, who is also active in rating sustainable companies through his start-up Impaakt.
The result of this study will allow us to approach potential partners, since SwiSOX is considered as a segment of an existing exchange, to avoid creating the entire infrastructure. Two stock exchanges exist in Switzerland, the SIX and the Berne stock exchange.