Presentation by Raffaele Della Croce (OECD) during the OECD-UNDP G20 Workshop in 2018

1. QUALITY INFRASTRUCTURE FOR
CONNECTIVITY ENHANCEMENT
OECD-UNDP G20 Workshop
5 November 2018, Paris, France
Raffaele Della Croce
Senior Economist - Long Term Investment
Directorate for Financial and Enterprise Affairs- OECD
Raffaele.dellacroce@oecd.org

2. 1. Infrastructure investment in the G20
• The Infrastructure Working Group
• Infrastructure as an Asset Class
2. The OECD’s contribution
• Past, present and future
3. Looking ahead
• Japan 2019 – quality infrastructure
• Future areas of work
Infrastructure investment – Overview

3. Infrastructure – a continuous G20 priority:
• Canada (2010), Australia (2014), Turkey (2015), China (2016),
Argentina (2018), Japan (2019)
Contribution of G20 DWG
Part of the G20 Finance Track through IWG
– Closing the infrastructure investment gap
– Developing infrastructure as an asset class
– Increasing private investor participation
1. Infrastructure investment in the G20
Infrastructure in the G20 - overview
3

4. History of the IWG:
• 2013: Initiation of the G20 Infrastructure Study Group
• 2014: Investment and Infrastructure Working Group (IIWG)
 Not convened in 2017
• 2018: Reconvened as the Infrastructure Working Group (IWG)
Steered by: G20 Presidency + two co-chairs (Australia & Brazil)
Other G20 bodies:
– G20/OECD Task Force on Long-term Investment
– Next meeting 15/16 November Paris :
http://www.oecd.org/finance/2018-lti-workshop-
sustainable-infra.htm
1. Infrastructure investment in the G20
The G20 Infrastructure Working Group
4

5. Roadmap to Infrastructure as an Asset Class
Informed by G20/OECD/WB Stocktake
1. Infrastructure investment in the G20
Argentina’s 2018 G20 Presidency
5
Improved
Project
Development
Greater
Standardisation
Improved
Investment
Environment
Contractual Standardisation
Financial Standardisation
Project Preparation
Bridging the Data Gap
Financial Engineering, Risk Allocation
& Mitigation
Financial Regulation & Capital
Markets
Quality InfrastructureQuality Infrastructure 2019

6. 1. Infrastructure investment in the G20
G20/OECD/WB Stocktake of Tools and Instruments
6
OECD focused on policy strategies, WBG focused on the operational project lifecycle.

7. • What the OECD has delivered in the past
– OECD Framework for Governance of Infrastructure
– G20/OECD Guidance Note and Support Note on the
Financing of Infrastructure and SMEs
• What the OECD is doing currently
– Report on Breaking the Silos: developing
infrastructure as an asset class and addressing the
information gap
– The G20 Infrastructure Data Initiative
• What the OECD could do in the future
2. The OECD’s Contribution
7

8. Work recognised at highest levels (FMCBG and/or Leaders):
• 2012: G20/OECD policy note on pension fund financing for green infrastructure and
initiatives
• 2013: G20/OECD High-level Principles on Long-term Investment Financing by
Institutional Investors
• 2015: G20-OECD Report on G20 Investment Strategies
• 2015: OECD Framework for Governance of Infrastructure
• 2016: G20-OECD Guidance Note on Diversification of Financial Instruments for
Infrastructure
• 2018: G20/OECD/WB Stocktake of Tools and Instruments Related to Infrastructure
as an Asset Class
These tools are valuable, but implementation is the key
2. The OECD’s Contribution – Past
OECD work delivered to date
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9. 2. The OECD’s Contribution – Past
Better Governance
– Better strategic planning and alignment of
investments across sectors
– Increased transparency and management of
integrity risks
– More emphasis on social value and on
engaging stakeholders more effectively
– Promotion of project pipelines, with
appropriate delivery mode choice and
allocation of financial risk
OECD Framework for Governance of Infrastructure
(endorsed by G20 in Antalya)
Objective: making the right projects happen, in a way that is cost
effective, affordable and trusted by users and citizens

10. 2. The OECD’s Contribution – Past
Better Financing
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– Diversifying Instruments and Optimising
Risk Allocation
– Equity instruments for the financing of
infrastructure
– Engaging institutional investors and capital
markets
– Addressing the information gap and
developing infrastructure as an asset class
G20/OECD Guidance Note and Support Note on the Financing of
Infrastructure ( Endorsed by G20 Leaders - Sept 2016)
Objective: attracting private sector, diversifying sources of finance,
lowering the cost of financing

11. 11
2. The OECD’s Contribution - Current
Addressing Data Gaps for Long Term Investment (LTI)
Private Investment in
Infrastructure
The Roles of Different
Investors
Diversified sources of
Finance
Risk Mapping and
Optimal Allocation
1. Mapping the
Financing of
Infrastructure
Mobilization of Private
Sector Financing
Additionality and
Value for Money
Innovative Risk Sharing
Instruments and Financial Products
Evaluating Government
Instruments
3. Mobilizing
Private Sector
Financing in
Developing
Countries
Sustainability
Performance
Benchmarking
Information
Asymmetry/standardisa
tion of documentation
Investment Mandate
Ambiguity: Financial
Products needed
2. Infrastructure
as an Asset Class
and role of
Institutional
Investors
Three main streams of work have been identified in the Breaking Silos report
and proposed for the G20 and reference work (OECD and other IOs) :

12. 2. The OECD’s Contribution - Current
The Infrastructure Data Initiative – Data as a public good
Major attributes of the proposal:
standardised, centralised and consolidated
data on infrastructure assets.
Global coverage in both developed and
emerging markets.
Collaborative , involving governments, MDBs,
IOS, and the private sector
A joint initiative by all MDBs, GIH, the OECD and private sector associations:

13. 2. The OECD’s Contribution - Current
Expected outputs
Infrastructure
Data Initiative
Data
Repository
Financial
Performance
Benchmarks
Economic
and
Financial
Viability
ESG
Performance
A dynamic approach
to infrastructure
investment analysis…
New benchmarks on
investment profitability
metrics (Return on assets,
return on equity, and
dividend yield, default rates
and recoveries, etc.)
Impact evaluation
at project/asset
level (utilisation
performance,
construction costs,
and delivery
performance)
Sustainability
and inclusive
growth impacts
and climate
related risks (i.e.
transition risk)

14. 2. The OECD’s Contribution - Future
OECD infrastructure strategy going forward
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1. Standard setting - Principles on Quality Infrastructure:
benchmarks, best practice and guidance on what good looks like
and what make infrastructure viable - across governance,
sectoral and geographic dimensions.
2. Capacity building: using the standard to assess countries’ policy
environments, identify and fill the gaps – including with OECD
infrastructure policy reviews.
3. Convening: coordinate international work, continue to identify
effective approaches, and support the G20
4. Connecting the dots: Making sure global efforts are aligned and
the right people are working together, for example emerging
technologies to drive standardisation, and firm-level database

15. Focus on “quality infrastructure”
Underlined as a priority in this year’s G20 Roadmap for infrastructure as an asset class
the G20 2016 Leaders Declaration
12-13 September - Joint Seminar on Quality Infrastructure in Tokyo, organised by
OECD, World Bank and Japanese Government
https://seminar-on-quality-infrastructure-investment-
2018.mof.go.jp/presentation.html
Potential output
Guidelines/Principles/Guidebook on Quality Infrastructure - integrated and
multidisciplinary international good practices promoting quality infrastructure
delivered in 2019
ESG Guidelines for quality Infrastructure
Benchmarks for Quality Infrastructure
3. Looking Forward
Japanese presidency 2019

16. Other OECD initiatives and recent activities

17. • The OECD is currently working on developing an horizontal project on “ Strategic Policies for
Sustainable Infrastructure”, which brings together the expertise of 19 directorates and agencies across the
OECD
• This project is part of OECD objective to strengthen the coordination of the numerous OECD works streams
stemming from its substance Directorates
• The Development Centre is one of the main contributors for the OECD-wide horizontal project on
developing international standards for quality infrastructure from a development angle bringing
together developing and emerging economies and OECD countries to exchange experiences and
lessons learned.
• The horizontal project is the operational response to the clear need to break out of silos and ensure a
multidisciplinary and cross cutting approach.
• The horizontal project will inter alia address the need for
– i) an integrated strategic framework for sustainable infrastructure,
– ii) further development of sustainable/bankable projects through standardisation and good practices
with a special focus on impact of new technologies,
– iii) appropriate data and benchmarks
– iv) thematic/sectoral/geopolitical/institutional factors
– v) assessment tools and processes including through country infrastructure reviews and
– vi)the strengthening of the international exchange of experience
OECD HORIZONTAL PROJECT ON STRATEGIC
POLICIES FOR SUSTAINABLE INFRASTRUCTURE
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18. THE OECD HORIZONTAL PROJECT
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19. Optimise current and recent work…
… by focussing on implementation
Building on:
 Principles on Quality Infrastructure in 2019
 OECD Breaking Silos report & the Infrastructure Data Initiative
 G20 Stocktake and Roadmap to Infrastructure as an Asset Class of 2018
 Leveraging DWG, the IWG and G20/OECD Task Force on Long-term
Investment to increase global cooperation.
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3. Looking Forward
Driving work in 2019 and beyond

20. 3. Looking Forward
Potential areas of focus going forward
Sustainable and
quality infrastructure
Diversifying
sources of finance
& private sector
Risk mitigation
and allocation
Addressing the
information gap
Infrastructure as an
asset class
Contractual and
financial
standardisation
Innovation and
emerging
technologies

21. • How can the G20 expand common ground on the contribution of quality
infrastructure to connectivity, inclusive growth and sustainable
development for all?
• What are common challenges to quality infrastructure and which
elements of quality should be prioritised according to national
circumstances and specific sectors?
• How can private resource and public finance and capacity better
complement to develop quantity and quality infrastructure investment?
• How can we best consolidate the elements of quality infrastructure going
forward, including for the development of internationally agreed
guidelines and standards?
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Which questions need to be
addressed in the medium term?

22. Annex

23. • Survey of Large Pension Funds and Public Pension Reserve Funds – April 2018
• G20/OECD/WB Stocktake of Tools and Instruments Related to Infrastructure as an Asset Class – Progress Report – March
2018
• Breaking silos: actions to develop infrastructure as an asset class and address the information gap – December 2017
• Selected good practices for risk allocation and mitigation in infrastructure in APEC economies – October 2017
• Investing in Climate, Investing in Growth – May 2017
• G20/OECD Guidance Note on Diversification of Financial Instruments for Infrastructure and SMEs and accompanying
G20/OECD Support Note (endorsed by G20 Leaders September 2016)
• Fragmentation in Clean Energy Investment and Financing (June 2016)
• Large Pension Fund and Public Pension Reserve Fund Surveys (2013, 2014, 2015, 2016)
• G20-OECD Report on G20 Investment Strategies: Volume I
• G20-OECD Report on G20 Investment Strategies: Volume II
• Annual Survey of Large Pension Funds and Public Pension Reserve Funds (last published 2016)
• Infrastructure Financing Instruments and Incentives – A Taxonomy (2015)
• Report on Effective Approaches of the G20/OECD High-Level Principles on LTI by Institutional Investors (September 2014)
• High Level Principles for Institutional Investors and LTI (2013)
• Risk and Return Characteristics of Infrastructure Investment in Low-income Countries
• Capital market instruments to mobilize institutional investors to infrastructure and SME financing in Emerging Market
Economies: World Bank Group/IMF/OECD (cooperation)
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OECD Infrastructure & LTI Publications

24. Facilitators Safeguards
Investment
Ecosystem
Supporting Improvements in Investment Climate and Promoting Private Investment
1. Policy Framework for Investment (OECD)
Facilitating Financial Intermediation
1. Summary of the G20/OECD/Singapore Ministry of Finance High-level Roundtable on Institutional
Investors and Long-term Investment (OECD)
2. Summary Report on Effective Approaches to Support Implementation of the G20/OECD High-
Level Principles (OECD)
Enabling Appropriate Legal and Appropriate Setting
1. Regulation of insurance company and pension fund investment
(OECD)
2. G20/OECD Principles of Corporate Governance (OECD)
3. Note on Action Plan for MDB Balance Sheet Optimization
4. OECD Methodology for assessing the implementation of the
G20/OECD Principles of corporate governance
Infrastructure
Supporting Improvements in Investment Climate
1. Improving Public Investment Efficiency in the G20 (IMF)
2. Overcoming Barriers to International Investment in Clean Energy (OECD)
3. G20/OECD Voluntary Aggregation Exercise Results of the Checklist on Long Term Investment
Financing Strategies and Institutional Investors
4. G20/OECD Report on Checklist on Long-Term Investment Financing Strategies and Institutional
Investors
5. G20/OECD Report on investment strategies, volume I
6. G20/OECD Report on investment strategies, volume II
7. Global Infrastructure Connectivity Alliance
8. AfDB,IMF and WBG report on investment compact with Africa
Facilitating Financial Intermediation
1. Mapping of Instruments and Incentives for Infrastructure Financing: A Taxonomy (OECD)
2. SME Debt Financing Beyond Bank Lending: the Role of Securitization, Bonds and Private
Placements (OECD)
3. IMF Note on Asset-Based Financing, such as Sukuk, for Infrastructure
4. Capital Market Instruments to Mobilize Institutional Investors to Infrastructure and SME Financing
in Emerging Market Economies (WBG/IMF/OECD)
5. Policies to Integrate Islamic Finance into Global Finance (IMF/WBG)
6. G20/OECD Guidance Note on the diversification of financial instruments for infrastructure and
SMEs
7. G20/OECD Support note on diversification of financial instruments for infrastructure
Mobilizing MDB Resources and Role of NDBs
1. Draft Action Plan on MDB Balance Sheet Optimization (Canada)
2. Partnering to build a better world: MDBs’ Common Approaches to Supporting Infrastructure
Development (MDBs/ RDBs)
3. Official Development Finance for Infrastructure/Support by Multilateral and Bilateral Development
Partners (OECD)
4. MDBs’ Joint Declaration of Aspirations on actions to support infrastructure investment
5. MDB response to the G20 balance sheet optimisation action plan
6. MDBs’ Joint principles and ambitions on crowding-in private finance
Enabling Appropriate Legal and Institutional Settings
1. Towards a Framework for the Governance of Public Infrastructure
(OECD)
2. Recommended PPP Contractual Provisions and good practices on
PPP disclosure (WBG)
3. Framework for Disclosure In Public-private Partnership Projects
(WBG)
4. Matrix on Evaluating Existing Legal and Institutional Settings for
Infrastructure Investment (in this report)
5. Annotated Publi-Private Partnership Risk Allocation Matrices (GIH)
Project Spectrum: Project Planning, Prioritization and Process
Development
1. Infrastructure Prioritization Toolkit: Report on Recommended PPP
Contractual Provisions (WGB)
2. PPP Days 2015 Summary (EBRD)
3. WBG/OECD Project Checklist for PPPs
4. Global Infrastructure Hub Business Plan 2015-16
Addressing Data Gaps
1. Addressing Data Gaps In Long-term Investment: An agenda for
research (OECD)
Selection of Support Documents provided in 2015/17 to FMCBG

25. Low carbon Infrastructure: Mobilizing Finance for
the Transition in support of the 2017 German
presidency of the G20
“Boosting economic
growth does not mean
locking the world into a
high-emissions future,
provided pro-growth
reforms are combined
with coherent climate
policy and alignment of
policies across the
economy”
• May 2017: Launch the G20 report on “Investing in Climate,
Investing in Growth” - See chapter 7 on “Mobilizing
financing for the transition”
• Workshop on “Financing Green Infrastructure” on
November 3rd 3016 (See summary of the discussions for
further details)
• Other relevant work includes the OECD report on
Investment-Governance-Integration-ESG-Factors. For more
information see also OECD Centre on Green Finance and
Investment
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26. Develop consultation and
dialogue with private sector
(LTI Network includes
approx 3,000 financial
industry participants i.e.
asset owners, asset
managers)
The OECD is supporting the G20/APEC agenda on long-term investment through the
G20/OECD Taskforce on Institutional Investors and Long Term Investment
Financing (G20/OECD Taskforce)
See www.oecd.org/finance/lti
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The OECD Project on Institutional
Investors and Long-term Investment
OECD Long-
term
Investment
Project
Network on
Institutional
Investors and
Long-term
Investment
Collecting data and
information
Developing analysis
Towards a holistic approach to long-term investment analysis addressing
private sector participants across the value chain (corporations, banks,
institutional investors), including a broader range of issues (investment and
financing), using better data and analytical tools
G20/OECD Guidance Note on Diversification of Financial
Instruments for Infrastructure and SMEs, endorsed by G20 Leaders,
September 2016