rethink sustainability
How innovative finance can support Human Rights - Interview with Peter Maurer, President of the ICRC
Established in 1863, the International Committee of the Red Cross (ICRC) operates worldwide, helping people affected by conflict and armed violence and promoting the laws that protect victims of war. An independent and neutral organisation, its fundamental mandate stems from the Geneva Conventions of 1949. Based in Geneva, Switzerland, the ICRC employs over 20,000 people in more than 80 countries.
The ICRC is at the origin of the International Red Cross and Red Crescent Movement and three-time Nobel Prize Laureate.
The Program for Humanitarian Impact Investment (PHII, or Humanitarian Impact Bond) has generated a lot of interest. It was a first of its kind and the ICRC's first undertaking in the world of innovative finance. What were the key takeaways and learnings?
The humanitarian impact bond was indeed a positive learning experience for the ICRC. The first lesson for the ICRC is how vital it is to be clear on the problem to be addressed and the suitability of the HIB (Humanitarian Impact Bond) model. For example, outcomes-based mechanisms may work for certain types of long-term humanitarian endeavours, but less so for emergency responses.
Second, we found that you need to secure the support of potential outcome funders and other key partners very early on. And, to be clear, outcome funders are more difficult to find than investors. Third, impact bonds are one tool in a toolbox of new financing models. Fourth, it is by putting projects on the table and maintaining an open dialogue with our partners that we will help to develop the market for new financing models in fragile settings.
The long relationship between the ICRC and Lombard Odier helped create an innovative financing solution for a humanitarian project in the physical rehabilitation space. In what other areas of humanitarian intervention do you envisage similar payment-by-results structures working?
The ICRC has been investing time, effort and resources in the Goma West Water Supply Project, which aims to create water infrastructure in the west part of Goma city in DRC and establish a financially sustainable operating model. As we have seen with the dangerous COVID-19 pandemic, access to clean water is indispensable for people's health.
More generally, our sense is that water and infrastructure, energy and physical rehabilitation are among the thematic approaches most suited to new financing models. Therefore, these are the most likely areas of focus for us over the next few years. However, we are still learning and exploring. It will be essential for us as a community to build on and scale successful pilots and models, but also to create the capacity to learn and explore existing and novel avenues going forward.
Why did the ICRC embark on a journey toward humanitarian impact investing? In the ICRC's experience, how can financial institutions add value to humanitarian projects?
For the ICRC, new financing models are about developing new ways of working and diversification of financing. When it comes to the former, we are looking at long-term projects completed in partnership with humanitarian, development and private sector stakeholders; and which share risks in innovative ways, have a certain scale, target efficiencies and take preventative approaches. And we have the ambition to mobilise development funding to de-risk private investments. We are looking to financial institutions to provide seed funding and technical assistance, particularly around structuring specific products, but also to help us find socially-minded investors and to mobilise investment themselves.
Important information
This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.
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