From Silos to Synergies for Inequality Reduction

How can multilateral climate and development finance work not only for the environment, but also for social justice? At a time of growing inequality, the side event hosted by the Global Solutions Initiative and GIZ at AFD’s headquarters in Paris brought this urgent question to the forefront.

The session was part of the broader conference “Bridging Divides: Evidence-Based Policies for Inequality Reduction and Sustainable Development”—a space where researchers, policymakers, and practitioners engaged in deep dialogue about structural inequality and development strategies.

A Timely Contribution to a Growing Conversation

Throughout the first days of the conference, the EU Inequality Marker had emerged as a key reference point in discussions on how to better integrate inequality reduction into development programming. This side event continued that conversation—zooming in on the role of multilateral climate, biodiversity, and SDG-related funds in achieving more integrated outcomes across the green and social agendas.

The side event was embedded in the ongoing work of the Solutions Lab: Scalable Solutions for Investments for the Reduction of Inequality, a joint initiative by GSI and GIZ. The Lab contributes directly to global policy dialogues, including those under the G20 presidencies of Brazil and South Africa, where inequality reduction is high on the agenda.

Moderated by Derya Bischoff (GIZ), the panel brought together leading voices from civil society, academia, and development finance:

• Nithi Nesadurai, Director and Regional Coordinator, Climate Action Network Southeast Asia (remote)
• Lauren Hermanus, Cofounding Director, Southern Transitions (remote)
• Rawane Yasser, Researcher, Agence Française de Développement (on-site)
• Frank Vanaerschot, Director, Counter Balance (on-site)

Together, they explored how climate investments can be reimagined to proactively reduce inequality, both within and between countries.

Main Takeaways: A Call for Synergistic Finance

The discussion centered on how multilateral climate and development funds—such as the Green Climate Fund (GCF), Climate Investment Funds (CIFs), and others—can be better designed, governed, and implemented to address social disparities while tackling environmental challenges.

Key takeaways from the session included:

1. Strengthen Selection Criteria Through Social Indicators

Multilateral Climate Funds should integrate stronger, equity-based criteria in project selection. That means tying vulnerability assessments to indicators like the Human Development Index (HDI), Gini coefficient, and Multidimensional Poverty Index (MPI). This would help ensure that climate finance reaches those most affected—not just by environmental risks but also by social and economic exclusion.

2. Embed Distributive and Restorative Justice

All investment projects should explicitly contribute to social justice outcomes by default. That includes:

• Distributive justice: Ensuring fair allocation of resources, risks, costs, and benefits
• Restorative justice: Addressing historic environmental harm and social exclusion
• Social co-benefits: Advancing gender equality, job creation, and improved services for marginalized communities

3. Empower Local Civil Society

Speakers stressed the importance of meaningful stakeholder engagement at the local level. Civil society organizations must be involved not only in consultation, but also in design, implementation, and monitoring of projects. Their proximity to affected communities gives them essential insight into local needs and power dynamics.

4. Coordinate Investments Through Country Platforms

Effective climate finance needs context. Participants called for the strengthening of country platforms—mechanisms led by national governments, supported by multilateral development banks and agencies—to ensure that climate investments are aligned with national priorities and create synergies across funding streams.

5. Align Global Funders with Local Needs

One consistent challenge raised was the disconnect between global financing institutions and local implementing actors. To make climate finance truly responsive, interaction chains between funders and recipients must be improved—so that local priorities are not sidelined by top-down frameworks.

6. Use Public Financing to Build Coherence

Public finance—especially through Multilateral Development Banks (MDBs)—should not only aim to de-risk private investment. It should also be used to close coordination gaps between existing public sector programs, thus improving the overall coherence, accountability, and equity of development finance.

From Principles to Practice

Speakers emphasized that climate and inequality are deeply interconnected challenges. Without addressing social equity, the promise of green finance will fall short. But the tools for a more integrated approach already exist—they just need to be put into practice.

That’s where the Solutions Lab steps in. By fostering cross-sector dialogue and generating practical insights, the Lab seeks to bridge policy silos and offer scalable pathways for reform. Its findings will continue to feed into G20 conversations and broader international efforts to design financial instruments that serve both people and planet.

Featured image: Photo by Zoshua Colah on Unsplash