How global public investment should work

LONDON — Following the United Nations Biodiversity Conference in Colombia (COP 16) and in the midst of the United Nations Climate Change Conference (COP 29) in Azerbaijan, we find ourselves at a crossroads. Climate change and biodiversity loss are not just looming threats; they are already here, exacerbating social inequalities, economic instability and environmental degradation before our eyes.

While these problems affect us all, they are disproportionately caused by richer countries and hit poorer countries the hardest. As G20 leaders meet in Rio de Janeiro this week, they would do well to remember that their countries are responsible for about 80 per cent of both current and past greenhouse-gas emissions and should therefore be responsible for at least 80 per cent of climate action. Countries need a new global framework, guided by clear climate targets, to govern industrial and financial policies, as recommended by the Group of Experts to the G20 Taskforce on a Global Mobilization against Climate Change.

Given the persistent failure to mobilize funds to combat climate-related challenges, part of this new framework must be a new approach to global finance. Unlocking the vast financial resources required to tackle the climate, biodiversity, and water crises calls for a robust global public investment (GPI) model.

We must start thinking of international cooperation as a collective endeavor in which all countries benefit, contribute, and make decisions guided by shared missions. Missions built around clear, ambitious goals can galvanize public and private investment and offer a roadmap for overcoming the financial barriers that have been holding us back.

The existing financial architecture is not up to the task of providing the necessary climate and biodiversity finance, which will reach an estimated $2.4 trillion each year by 2030. Wealthy countries have repeatedly fallen short of their financing commitments, and climate finance in general has been fragmented, unpredictable, and dominated by short-term private investments that prioritize profit over long-term environmental stability. Meanwhile, developing countries have faced high borrowing costs and mounting debts that make it almost impossible to invest in their own future.

The result is a cycle of inaction. Without sufficient public funding, it is difficult to mobilise private investment for transformative projects like reforesting degraded landscapes, protecting coral reefs, or building climate-resilient infrastructure. Wealthier countries continue to drag their feet, often treating climate finance as an act of charity rather than a necessary investment.

A GPI- and missioned-based approach can change this dynamic. Missions are ambitious, clearly articulated, time-bound objectives that mobilise cross-sectoral solutions to specific problems, emphasising outcomes, not outputs. They are ideal for tackling challenges that do not necessarily have pre-defined or already-known technological fixes. Generating the necessary solutions requires a bottom-up approach to explore many options and mobilise economy-wide innovation, investment, and partnerships.

Mission-oriented policies can help us shift attention and financing away from specific industries, technologies, or firms, and toward shared challenges, as defined by the public sector. This way, all industries and types of firms with potential solutions can contribute to the broader effort. For example, policymakers might launch a mission to reduce plastic pollution in the oceans by 90 per cent by 2040; end deforestation in the Amazon by 2030; or restore at least 30 per cent of degraded forest and inland water ecosystems by 2030.

The idea is to set bold, clear goals that focus minds and resources on solving the biggest challenges of our time, rather than on small, piecemeal projects. Governments should not just fix market failures; they should actively shape markets and guide investment to areas that benefit society and the planet. But since this will not happen on its own, we need to apply a new “common-good” framing to policy debates, particularly in the global context.

To this end, the GPI approach reimagines how we finance public missions. In today’s system, international finance is largely driven by a donor-recipient model. Rich countries decide how much money to give, and poorer countries must compete for these funds. It is a system that reinforces power imbalances and makes it harder for developing countries to plan for the long term.

GPI flips this model on its head. Not only does it propose that all countries, regardless of income level, contribute to global public goods like climate stability and biodiversity protection. Crucially, it also involves all countries in the decision-making about where money is invested and how it is shared, giving the Global South a powerful say in resource allocation.

This approach is grounded in three principles. First, all countries stand to benefit from a stable climate and protected ecosystems. Second, all should contribute based on their capacity, so that everyone has skin in the game. Third, all should decide, so that it is not just the wealthiest who control how the money is spent.

By linking the GPI- and mission-based approaches, we can unlock the finance needed to meet global sustainability goals. While a mission sets a bold target, like halving carbon dioxide emissions in ten years, the GPI model provides the financial framework, a system built on shared responsibility and mutual benefit, to make it happen.

The scale of the climate and biodiversity crises is often compared to the challenges faced after World War II, when the US-financed Marshall Plan helped rebuild Europe’s economy. What the world needs now is a Marshall Plan for the planet: a coordinated, international effort to mobilise the funds, knowledge, and technology needed to address the existential threats of our time.

The world has enough money; it just needs to become better aligned. Public development banks alone hold $22.4 trillion in assets under management ($20.2 trillion of which is with national development banks). If multilateral and national development banks cooperate to achieve shared objectives, they could provide the stimulus we need to mobilize private-sector capital on a much larger scale.

This is not just about saving the planet. It is about creating a fairer, more resilient world for everyone. We are all in this together. It is time to start acting like it.

Mariana Mazzucato, Professor in the Economics of Innovation and Public Value at University College London, is Founding Director of the UCL Institute for Innovation and Public Purpose, Co-Chair of the Global Commission on the Economics of Water, and Co-Chair of the Group of Experts to the G20 Taskforce for a Global Mobilization Against Climate Change. She was Chair of the World Health Organization’s Council on the Economics of Health For All. She is the author of The Value of Everything: Making and Taking in the Global Economy (Penguin Books, 2019), Mission Economy: A Moonshot Guide to Changing Capitalism (Penguin Books, 2022), and, most recently, The Big Con: How the Consulting Industry Weakens Our Businesses, Infantilizes Our Governments and Warps Our Economies (Penguin Press, 2023). A tenth anniversary edition of her book The Entrepreneurial State: Debunking Public vs. Private Sector Myths was published by Penguin in September. Jonathan Glennie, Director of the Global Cooperation Institute, is Co-Founder of Global Nation and the author of The Future of Aid: Global Public Investment (Routledge, 2020). Copyright: Project Syndicate, 2023. www.project-syndicate.org