COP28- The Role of the Multidimensional Vulnerability Index (MVI) in Leveraging Finance for Resilience Building

Many countries remain underfunded, and increasingly vulnerable. This event will underscore these inequalities and their impacts and explore the relevance and applicability of better adapted methods for making funding available to those who need it most. 

- Identify barriers and challenges faced by vulnerable countries and territories in their efforts to access climate finance and to discuss ways to enhance their capacity to utilize financial resources most effectively.

- Discuss the role of the Multidimensional Vulnerability Index (MVI) in enhancing access to green finance (for countries & territories) and how the MVI can inform and facilitate financial support for same. One question in particular is whether, in the face of climate change, we should consider a universal indicator like the MVI or an indicator constructed in the same spirit but more focused on the climatic dimension of vulnerability.

- Showcase and explore innovative and transformative financing mechanisms, instruments and approaches that can mobilize public and private funds, such as green bonds, climate funds, impact investments, and blended finance.

- Promote the integration of climate considerations into financial systems, including banking, insurance, investment, and capital markets, to incentivize sustainable investments and align financial flows with the climate objectives of targeted countries and territories.

- Discuss strategies for capacity building, knowledge sharing, and technical assistance to strengthen institutional capacity, project design, and project implementation for effective climate financing.

- Heightened understanding of the importance of climate finance to enable vulnerable countries and territories to adapt to and mitigate the effects of climate change.

- Increased awareness of the difficulties these countries and territories face in accessing concessional finance for resilience building against the effects of climate change.

- Enhanced understanding of the relevance of the Multidimensional Vulnerability Index for target countries and territories to access innovative forms of climate finance.

- Increased knowledge about innovative green finance mechanisms and the ways in which target countries and territories may gain access to them.

- International coalition building and partnerships in advocating for the streamlining of vulnerability criteria in the lending practices of international financial institutions, governments, and the international donor community.

Moderator : hab Downer, the Director of the Green Overseas (GO) Programme

Opening remarks

Cristelle Pratt, Assistant Secretary General of the OACPs

Panel 1. Measure Vulnerability to better allocate limited financial resources to those who need it most

El Khalil Cherif, Senior Researcher at the Marine, Environment and Technology Center (MARTEC)

Matthieu Boussichas, Programme Officer at FERDI

Panel 2. Impact of climate change on the ground, and share views on the urgent need for climate change resilience related efforts 

Hon. Josephine Connolly, Minister of Tourism, Environment, Fisheries and Marine Affairs, Culture and Heritage, Agriculture, and Religious Affairs, for the Government of Turks & Caicos

Hon. Quincia Gumbs-Marie, Minister for Sustainability, Innovation and the Environment, for the Government of Anguilla

Panel 3.  How to practically close this financial gap in the near and long-term future in order to effectively address  of the direst impacts of climate change 

Representatives from international development finance institutions 

Closing remarks

Nicolas Chenet, Director of the Sustainable Development Department at Expertise France,  an agency which is part of the AFD Group.

Reminder of the definition of vulnerability as it is currently standardised by the United Nations:

Vulnerability is the risk that a country will be permanently affected by shocks of exogenous origin. It depends on the likely scale of the shocks, the country's exposure to them and its ability to cope with them, known as resilience.

Vulnerability is multidimensional: economic, environmental and social.

A distinction is made between :

• Structural vulnerability, which does not depend on the country's policy: landlocked, rising sea levels, dependence on a raw material whose world price is highly volatile, etc.
• General vulnerability, which also includes the impact of current and future policies. 

This concept is important because these shocks have a major negative impact on development. And it is useful:

• To understand what structurally handicaps a country
• It's also very useful for influencing international public policy on development funding. It's a question of justice with the aim of compensating for a structural handicap suffered by a country and for which it is not responsible.

How can this multidimensional vulnerability be measured?

Three conditions must be met:

• Firstly: The index must obviously be multidimensional;
• Secondly: It must be universal, i.e. measured for at least all developing countries so that the vulnerability measured can be compared with that of other countries.
• Thirdly: It must distinguish between what is government policy and what is structural.

Many indices attempt to measure vulnerability, but very few meet these conditions.

Until now, there has been the United Nations Economic and Environmental Vulnerability Index.

There is also the Commonwealth Universal Vulnerability Index (UVI), which was developed with the help of Ferdi.

And now, there is the Multidimensional Vulnerability Index (MVI) recently developed by a high-level United Nations panel, at the request of the Secretary-General, with the technical support of a team of researchers from Ferdi.

What is this famous MVI? 

It is an index for measuring the vulnerability of countries that covers the three dimensions of sustainable development, by combining indicators that measure the extent and exposure of each country to shocks, and indicators that measure each country's lack of structural resilience.

It therefore does not include an indicator assessing the country's current policy, so as not to ultimately reward a government whose country is vulnerable due to poor management.

An MVI, yes, but what for?

It has three possible uses:

• It can help to identify a category of countries, like the EVI for LDCs.
•  It can be used as an eligibility criterion for funding. 
• Finally, it can be used as a criterion for allocating concessional resources to vulnerable countries. In fact, the United Nations has officially requested that such an index be used to allocate concessional resources, vulnerability being a complementary allocation criterion to more traditional criteria such as per capita income, performance indicators, etc. 

To conclude, the MVI is an important step in taking vulnerability into account in the access of vulnerable countries to financing, as it enables countries to be ranked according to their vulnerability, even if certain aspects of its design can certainly be improved.

A question arises today for the allocation of concessional funds intended to combat climate change: should we use a multidimensional index like the MVI, which by definition does not measure climate vulnerability alone, or rather an index of the same type but dedicated solely to measuring physical vulnerability to climate change? 

At FERDI, we believe we need a specific index that we have developed for this purpose.