Hilen Meirovich on how innovation can be utilised to accelerate sustainable investment
Ahead of the Sustainable Innovation Forum 2019 taking place in Madrid, Spain on the 10-11th December, we caught up with Hilen Meirovich, Head of Climate Change at IDB Invest, to discuss how innovation can be utilised to accelerate sustainable investment.
Ahead of the Sustainable Innovation Forum 2019 taking place in Madrid, Spain on the 10-11th December, we caught up with Hilen Meirovich, Head of Climate Change at IDB Invest, to discuss how innovation can be utilised to accelerate sustainable investment.
Q. Let’s start with some background on IDB Invest and its ambitions for the next 5 years.
IDB Invest is committed to maximising development impact in Latin America and the Caribbean. We also realise that we cannot do so without integrating climate considerations into all our operations. As such, since 2016, we have doubled the proportion of our financing going to projects that mitigate or adapt to climate change. Now, we have set a 30% floor for climate finance, and a requirement for 40% of all our projects to include climate finance. In the next five years, we are seeking to become the leading climate-smart development finance institution, integrating climate considerations, incentives and training across the organization. IDB Invest is also preparing to bring bonds dedicated to climate projects, mobilising additional climate resources and to be a climate knowledge broker.
Q. Many still deny the evidence that economic prosperity and environmental sustainability can be driven in unison. Given your investment goals, how would you respond to such a statement? How can economic growth and climate action be balanced to deliver on goals of both social equity and minimal environmental damage?
Firstly, in addition to assuring financial return in projects, IDB Invest requires a high development outcome, denominated through an internal “DELTA” (Development Effectiveness Learning, Tracking and Assessment) score.
Secondly, IDB Invest works not only to innovate financial products and projects that bring together financial return and environmental sustainability, but also to create markets for these products. Originating and executing financing that provides both financial and environmental sustainability is at the centre of what we do. In 2019, IDB Invest became a supporter of the Taskforce for Climate-Related Financial Disclosures, which will provide us with a framework not only to evaluate the climate risks at an institutional level, but also to identify new opportunities for revenue in the context of the low-carbon economy.
Q. IDB Invest’s Development Effectiveness Framework is central for adding value beyond financing, could you tell us more about it? How do you ensure that your investments incorporate climate adaptation and mitigation?
IDB Invest has created the Development Effectiveness Learning, Tracking and Assessment (DELTA) tool that assigns a score to each project we consider for investment. The DELTA project score is based on the development outcome and the financial and non-financial additionality. Climate change outcomes for project beneficiaries is measured through the DELTA tool and IDB Invest does not invest in projects with less satisfactory DELTA scores, ensuring development effectiveness in all our projects. Furthermore, 40% of our transactions will include a portion of climate finance, which is dedicated either to climate change mitigation, or adaptation, or both, according to the MDB Climate finance methodology.
Q. How do you think innovation and technology can be utilised to accelerate investment into sustainable development? Where should research and investment be focused to achieve this?
As a development bank and a climate-smart institution, one of our focuses is creating inclusive business models for climate change mitigation and adaptation. We need to innovate business models and financial products that not only help to mitigate and adapt to climate change, but also ensure a just transition and inclusive way of doing so. Furthermore, as technology advances, not only are we finding new products but also more affordable products. More research and investment are needed around how to make sustainable investments that include all people around the world, including people at the base of the pyramid. Some examples include low-cost, resilient and energy efficient housing and green financing for the individuals and entrepreneurs through fintechs.
Q. What is the importance of events such as the Sustainable Innovation Forum in supporting the goals of IDB Investment?
IDB Invest is committed to making finance flows consistent with a pathway towards low greenhouse gas emissions (1.5 degree world) and climate-resilient development, as per the Paris Agreement. The Sustainable Innovation Forum is bringing together sector leaders to accelerate solutions for climate action. IDB Invest is not only looking forward to sharing best practices and lessons learned around climate financing, but also to learn from other thought leaders and regions about solutions for climate action in order to then continue to innovate and deliver products and solutions for its own business in Latin America and the Caribbean.
IDB Invest is a Strategic Partner of the upcoming 10th annual Sustainable Innovation Forum taking place alongside COP25, 10-11 December in Madrid, Spain. To learn more about the agenda, the panels, the speakers and how to register, visit the event's official website here.
Visit IDB Invest's website here.
