DEVELOPMENT

4 The Afd2025 scenarios
ALIGNING
ASPIRATIONS
In this scenario, governments and regional and multilateral organizations, as well as civil
society and businesses, successfully cooperate to regulate finance (notably incorporating
environmental and social objectives) and funnel capital flows into financing the real
economy and sustainable development. This multipolar and multi-stakeholder coordination
hangs not only on deepening the commitment of States and their central banks, of the
G20 and civil society, but also on firmly challenging the role of rating agencies and private
financial actors. Private financial actors are showing increasing interest in their social mandates
through enhanced CSR policies, and some of them are opening up their governance to
civil society actors. Funding the ecological transition requires substantial investment. (10)
As the trade in rights to pollute has clearly shown its limits, large public and private financial
institutions have organized themselves to support the implementation of public policies
geared to financing the environmental transition.
“Immediate and targeted actions are possible. For example, deepening banking
reforms to separate retail banks from investment banks, and rewriting the Basel III
prudential framework (which overly shortened banks’ investment horizons by
heightening the aversion to risks of long-term investments), which would tend towards
a kind of “green” Basel IV agreement. This would encourage long-term financing for
green infrastructure without weighing too much on their capital base.” Gaël Giraud
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Box 14
Expanding “ethical” finance?
Citizens’ increasingly responsible behavior in matters of consumption and finance are
helping to heighten pressure on governments and private actors. By 2025, ethical finance
and environmental finance have become sizeable markets. Growth in these sectors has
been fueled by the rise in household wealth (e.g., in France, +50% from 2000 to 2010)
and the willingness of institutional and private investors to embed non-financial and social
criteria into their investments. In France, the market for solidarity-based and responsible
investment, which increased fifteen-fold between 2005 and 2012 (from EUR9 to 149
billion), may well account for half of total investments by 2025. In the United States,
so-called “ethical” finance, which accounted for 10% of collectively managed savings
in 2014, could increase fourfold by 2025.
Foresighting for Development
Development agencies, steering through future worlds. Afd2025
I
10/ The European Commission’s roadmap estimates additional annual financing needs at 1.5% of total European GDP.
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