An Innovative IFI Operating Model for the 21st Century

The document argues that MDBs must shift from a project-by-project approach to coordinated country and sector platforms, utilizing 'Just Term Sheets' to standardize transition investments. It recommends scaling risk-sharing instruments, such as guarantees and local currency loans, to lower the cost of capital in EMDEs. Furthermore, it calls for a business model overhaul, transitioning from an 'originate to hold' to an 'originate to distribute' model to recycle capital and increase lending capacity. The paper also emphasizes the need for standardized KPIs, improved data sharing via entities like the GEMS risk database, and the institutionalization of crisis-response toolkits for regular climate action.

• MDBs should transition from a project-by-project approach to coordinated country and sector platforms, utilizing 'Just Term Sheets' to standardize transition investments and ensure the needs of multiple stakeholders, including unions and domestic market players, are met.
• To mobilize private finance and reduce the cost of capital in emerging market and developing economies (EMDEs), MDBs must scale risk-sharing instruments, particularly guarantees. An OECD evaluation indicated that guarantees accounted for 26% of all mobilized private finance between 2018 and 2020.
• MDBs need to address exchange rate risks by supporting local currency denominated loans, as approximately 60% of foreign currency debt issued by firms is USD denominated and 23% is Euro denominated.
• The document proposes a shift in MDB business models from 'originate to hold'—where loans are held until maturity—to an 'originate to distribute' model. In this new model, MDBs would securitize or bundle loans to sell to the private sector, thereby recycling capital and increasing lending capacity.
• Standardization of Key Performance Indicators (KPIs) and investment labels is necessary to drive coordination and establish asset classes for climate-friendly investments, similar to the development of green bonds.
• Publicly available credit default data from the Global Emerging Markets (GEMS) risk database consortium is critical for expanding private sector financing and strengthening the risk assessment of MDB assets.
• MDBs should institutionalize their crisis-response toolkits—which offer higher risk tolerance and faster decisions—for regular climate action, noting that the World Bank's current funding for mid-sized crises (approximately one per decade) is inadequate for the current 'polycrises'.

APA

Pinko, N., Tonkonogy, B., Widge, V., & Buchner, B. (2023). An Innovative IFI Operating Model for the 21st Century. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2023/06/IFI-Operating-Model-Reform-Discussion-Paper-Apr-2023.pdf

Chicago

Pinko, Nicole, Bella Tonkonogy, Vikram Widge, and Barbara Buchner. An Innovative IFI Operating Model for the 21st Century. Climate Policy Initiative, 2023. https://www.climatepolicyinitiative.org/wp-content/uploads/2023/06/IFI-Operating-Model-Reform-Discussion-Paper-Apr-2023.pdf.

Wikipedia

{{cite report |last1=Pinko |first1=Nicole |last2=Tonkonogy |first2=Bella |last3=Widge |first3=Vikram |last4=Buchner |first4=Barbara |title=An Innovative IFI Operating Model for the 21st Century |publisher=Climate Policy Initiative |date=April 2023 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2023/06/IFI-Operating-Model-Reform-Discussion-Paper-Apr-2023.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{pinko2023innovative, author = {Pinko, Nicole and Tonkonogy, Bella and Widge, Vikram and Buchner, Barbara}, title = {{An Innovative IFI Operating Model for the 21st Century}}, institution = {Climate Policy Initiative}, year = {2023}, month = apr, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2023/06/IFI-Operating-Model-Reform-Discussion-Paper-Apr-2023.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }