After Seville 

The fourth UN Financing for Development conference, which concluded in Seville earlier this month, was a high-stakes meeting. The climate crisis is accelerating while climate commitments are weakening; official development assistance is shrinking while debt service is eviscerating poor countries’ education and health budgets. The negotiated outcome from the conference, known as the “Seville Compromiso,” is a mixed bag. The very forces behind the climate-debt crisis—capital’s twin wings, Big Finance and Big Tech—have strengthened their grip on the ambitions for “transformative development.” Around 6,000 corporate lobbyists (nearly half the total attendees) swarmed Seville’s plenary halls, peddling “blended finance,” “capital mobilization” and “AI for SDGs,” while Southern delegates pleaded for debt relief and climate finance. On the other hand, the Compromiso endorsed (on paper) a UN intergovernmental debt architecture process (with opt-outs from rich countries), tax justice, and social protection. In reality, it recycled the magic Billions to Trillions thinking that had become dogma at the  Addis Ababa conference a decade ago—that is, development will only happen if it is investible, if it can mobilize private capital. The Compromiso added a notable qualification: investors should pay closer attention to development outcomes.  BlackRock, we learnt in Seville, should ensure that its “investible” hospital in India, partly subsidized by concessional funding and partly by local health spending, ticks an SDG box. But the real battle raged elsewhere. While debt campaigners debated principles, the “derisking complex”—lobbyists, finance ministries, and multilateral banks—was laser-focused on one goal: how to turbocharge private capital into development assets. 

Still, multilateralism survived Seville. Its next stage will be COP30 in Belém  in November. The Brazilian hosts are in a delicate geopolitical position. For the first time since he took power in 2012, China’s Xi Jinping snubbed the July meeting of the BRICS countries in Rio de Janeiro, prompting speculations about the group’s cohesion and its future as an alternative to Western (US) hegemony.  In retaliation for what he has termed the “legal mistreatment” of former president Jair Bolsonaro, Trump has threatened 50 percent tariffs against Brazil. For his part, whilst insisting that “Brazil belongs to the Brazilians,” Lula has been careful not to overly  antagonize the US. For instance, Brazil attended the Hague Group’s Emergency Conference for Gaza, convened by South Africa and Colombia in Bogotá, but it did not join the twelve countries that announced formal sanctions against Israel.

What does this mean for Brazil’s leadership of climate multilateralism? The parties to the COP29 conference in Baku agreed on a Baku to Belem Roadmap. They have called on “all actors to work together to enable the scaling up of financing” to developing countries for climate action, to the tune of “at least USD 1.3 trillion per year by 2035.” Brazil is in charge of developing that Roadmap and building consensus for it until the Belém meeting takes place in November.

To that end, and as a first step, Brazil launched the COP30 Circle of Finance Ministers in April. The fact that Finance Ministers, and not ministers for the environment, are the first port of call in global climate negotiations is notable. As the late Malawian economist Thandika Mkandawire noted, the Washington Consensus turned Finance Ministries into enforcers of neoliberal orthodoxy. Ministries of Finance, once simply accommodating the decisions of the spending and planning ministries—Ministries of Trade, Industry, Education, and Agriculture—gained ground in the 1960s and 70s, and “palace wars” were fought as the development paradigm shifted from planning to the Washington Consensus. The developmentalist view of economists in spending ministries made way for the technocratic “watchdogs of spending.” Recognizing this, Brazil had little choice but to summon Ministers of Finance, the designated gatekeepers of neoliberalism. It is finance ministers, after all, who find tremendous appeal in the promises of investible investment, hoping that small amounts of public money can activate the power of private cash.

The Baku to Belem Roadmap to $1.3 trillion, as it is known, appeals to derisking in its very title: private and public finance will be mobilized to raise those $1.3 trillion. Brazil has to craft that Roadmap and build consensus for it until the Belem meeting. It has therefore proposed five strategic priorities for the COP30 Circle of Finance Ministers:

• Reforming Multilateral Development Banks (MDBs);
• Expanding concessional finance and climate funds;
• Creating country platforms and boosting domestic capacity to attract sustainable investments;
• Developing innovative financial instruments for private capital mobilization;
• Strengthening regulatory frameworks for climate finance.

Priorities 1, 3, and 4 seek to enhance the institutional ecosystem of derisking, which, for many in Seville, has so far failed. Derisking lobbyists have a simple explanation: there aren’t enough investible projects—not because investors want high risk-adjusted returns from development, but because the “public” side of the public-private partnership hasn’t delivered on the promised institutional upgrade. Reforming the MDBs, also on the agenda in Seville, is narrowly about enhancing their capacity to mobilize private finance, through instruments such as mobilization target ratios, the World Bank’s guarantee platform, and other measures to coordinate across institutions. Country platforms, promoted as country-owned, coordinating mechanisms for key stakeholders, are intended to smooth over the obstacles to “investibility” that have so far characterized these development efforts. But the Just Energy Transition Partnerships (JETPs) in South Africa, Vietnam, Indonesia, and Senegal are not encouraging for derisking advocates. Adam Tooze once dubbed them “the Paper Tigers of Western climate geopolitics,” and not much has changed since. The JETPs coalitions of private financiers, donors and local governments have not mobilized the billions they promised to, and they are less likely to do so without US participation. Instead, the JETPs have been a vehicle to legitimize the privatization of the energy sector. For instance, South Africa’s JETP is currently focused on derisking private investments in transmission.

The JETP for Vietnam offers a fascinating case of a country that can flex its transformative muscle against derisking once its government accepts that private returns are excessive. Vietnam has benefited from the current geopolitical tensions, as many Western corporations have shifted out of China to diversity value chains.  Apple, Samsung or Intel have relocated there, attracted in part by Vietnam’s renewable energy strategy. Indeed, since 2017, Vietnam’s state utility EVN has purchased renewable energy at above-market prices, a derisking subsidy intended to attract foreign investors. As EVN got locked into a high-cost derisking strategy, its losses reached USD1 billion by 2023. In response, the Vietnamese government decided to roll back such favorable terms, with investors “raging” over its alleged breach of power contracts.

Priority 2, expanding concessional finance and climate funds, is also part of derisking capacity building. It could see concessional finance directed into private climate funds, such as BlackRock’s Climate Finance Partnership, started with concessional funding from Japan, Germany and France. Its 2025 Impact report boasts a series of successful “investible energy” projects, including Lake Turkana Wind Power, Kenya’s largest private renewable energy project. The Lake Turkana project sheet confirms again that the Seville Compromiso nod to investible “development outcomes” needs a tighter institutional framework to govern derisking, as detailed in my first Dispatch from Seville. According to BlackRock, Lake Turkana is delivering SDG outcomes on renewable energy, water, access to electricity, etc. But this is highly misleading.

Lake Turkana Wind Power is an egregious example of green extractivism masquerading as energy sovereignty. It has locked the state-owned Kenya Power into a costly twenty-year power purchase agreement (PPA). By late 2024, a Kenyan parliamentary committee asked the Ethics and Anti-Corruption Commission and the Directorate of Criminal Investigations to probe the state employees that signed the LTWP PPA, while the government imposed a moratorium on PPAs. Local trade unions went further, demanding that Kenya “revoke all PPAs that have been signed with various IPPs and renegotiate better contracts that are flexible and also provide for payment in Kenya Shillings.” 

Indeed, the “investible renewables” strategy turned out to be more than a fiscal time bomb. It undermines transformative development. Saddling the country with the second highest energy costs on the continent, it has eroded the room for green industrial policy while undermining the competitiveness of local manufacturers. Kenya may try to pull a Vietnam and renegotiate those contracts, but anything perceived to undermine the mobilization of private capital would spark a chorus of outrage. 

To its credit, Brazil has tried to shift tack on Priority 2 with its Tropical Forest Forever Facility (TFFF) initiative. Should the concept be brought to fruition, it  would initiate a blended finance fund (the Tropical Forest Investment Fund, TFIF) to mobilize private capital for the state, rather than for private owners of investible infrastructure. Brazil wants the TFIF to raise $25 billion in concessional lending from rich countries (although the US commitment is now in doubt) and then issue another $75 billion in debt (presumably fixed income bonds), the proceeds of which would be invested in emerging countries’ sovereign bonds. The interest-rate differential, estimated at around 2–3 percent, would be used to first service TFIF’s senior debt, then to pay interest due on its sponsor capital, and lastly to make results-based payments to tropical-forest countries. While the Global Forest Coalition and other forest activists are rightfully critical of the restorative potential of such market-based initiatives, the merit of this initiative is that it appropriates the language and logic of derisking without privatizing forests, instead aiming to direct resources to public authorities.

The fifth priority is to strengthen regulatory frameworks for climate finance. It is deliberately ambiguous. It seeks to enlist proponents of two fundamentally opposed approaches to climate finance: derisking and disciplining. For derisking advocates like the Climate Policy Initiative, this is about “appropriate enabling environments” that “could crowd in the required private finance for achieving $1.3 trillion.” It involves “developing and operationalizing sustainable finance taxonomies, integrating climate risk into prudential regulation, and adopting stronger carbon pricing frameworks.” This is the language of the derisking approach to decarbonization: the strongest possible financial regulation is the incorporation of climate risks in prudential regulation, a single materiality (from climate crisis to private financial performance) take that BlackRock and other dirty financiers have long pushed in Europe, where attempts to regulate dirty finance have been strongest. It is the same regulatory language of the Seville Compromiso, which frames decarbonization as a financial stability issue alone, and resorts to weak instruments—weak because of the essentially voluntary nature of the process—like transition plans and climate stress testing.

But the word “strenghten” invokes a different strategy, one of building state capacity to discipline carbon financiers. Not so long ago, just before the Covid-19 pandemic, European regulators and politicians adopted “double materiality” as the basis for decarbonizing finance – somewhat shockingly, double materiality was also mentioned in the Compromiso, presumably because few understand its rather radical origins. BlackRock lobbied hard against double materiality because it doesn’t just focus state efforts on protecting financiers’ balance sheets from the climate crisis. It recognizes that  financiers’ dirty lending has material effects on the climate crisis itself. A double materiality approach requires the state to penalize dirty credit. This means building state capacity to include a disciplinary aspect—carrots and sticks—in climate-policy that is fundamentally at odds with the derisking agenda that puts private capital in the driver’s seat. Even if the political appetite for brown penalties has diminished everywhere, carbon financiers continue to worry about a future in which Big Green States decide that substantive penalties on dirty finance would rapidly scale up climate finance by redirecting capital flows. Given that Brazil has recently weakened environmental licensing laws, it would seem the derisking approach will dominate Priority 5 too.