New Global Financial Structure Stress Tested Successfully

Cambridge, UK – The University of Cambridge’s Centre for Resilience and Sustainable Development (CRSD), in collaboration with the Commonwealth Secretariat, has successfully unveiled a pioneering financial model designed to attract sustainable investment towards youth and nature, through the landmark Cambridge Policy Simulation Lab (CPSL) event held at Newnham College on February 4th and 5th, 2024.

Under the leadership of Prof Nazia M Habib, the simulation lab event served as a platform to stress test a new global financial system, showcasing the innovative Common Pool Asset Structuring System (COMPASS) aimed at Small Island Developing States (SIDS). This initiative is part of the transformative 'Their Future, Our Action' project, which, over two years, engaged 5,000 youths and accumulated more than 15,500 expert hours towards developing sustainable financial solutions.

Following the workshop, Prof Habib remarked:

The success of the CPSL event propels us toward a future where our financial models do more than just address the challenges faced by Small Island Developing States; they reimagine the very foundation of sustainable development. By empowering youth and prioritising environmental stewardship, we are not only responding to current needs but also paving the way for a new era of resilience and prosperity. Our work here is a beacon of what can be achieved through innovative, collaborative efforts, setting a precedent for academic and practical excellence in solving the world’s most pressing issues.

The event was distinguished by the attendance of esteemed VIPs, including the Secretary General of the Commonwealth, the High Commissioners of the Bahamas, Bangladesh, Dominica, and Seychelles, and prominent directors from the United Nations and the private sector; in addition, youth leaders, senior lawyers, private company programme directors, World Bank climate specialists, and ESG Investors were present, underscoring the global commitment to fostering sustainable financial solutions for Small Island Developing States.

The CRSD team introduced and utilised a suite of novel methodologies during the simulation lab to generate and evaluate unique policy solutions aligned with the goals of COMPASS. These methodologies include:

Creative Ideas Studio (CIS): A think-tank session for brainstorming innovative finance solutions.
Cambridge Power Mapping (CPM): A strategic tool for identifying key stakeholders and their influence on policy implementation.
Institutional Feasibility Study (IFS): An analysis to assess the practicality of proposed policies within existing institutional frameworks.
Cambridge Feedback Mapping (CFM): A mechanism for visualising the impact of policies and receiving feedback from affected communities.
Tigers Den: A critical review panel akin to a shark tank, where proposed policies are rigorously challenged and refined.

These methods were crucial in stress testing a new global financial structure that prioritises sustainable investments in youth and environmental projects. This approach signifies a shift towards a system thinking and creative thinking framework, ensuring that financial models like COMPASS are not only innovative but also feasible, impactful, and resilient.

Speaking at the opening of the workshop, the Commonwealth Secretary-General, the Rt Hon Patricia Scotland, said:

COMPASS can accelerate SIDS’ access to finance by overcoming challenges of scale, risk and complexity, by helping our members work together: pooling resources, expertise and decision-making processes; developing a common language to describe the challenges they share and developing a robust pipeline of funding applications and investable projects.

This initiative reflects the Commonwealth’s commitment to addressing the unique needs of SIDS through a comprehensive and collaborative approach.

The CPSL event highlighted the successful integration of blended finance for youth-led, environmentally-focused projects through COMPASS, demonstrating a 50-fold return on investment. This achievement underscores the potential of pooled finance and public-private partnerships (PPPs) in overcoming the financial challenges faced by SIDS, creating 10,000 youth training opportunities and securing 10 million USD in blended finance.

The event concluded with a formal dinner featuring keynote addresses by Professor Sir Nasser D. Khalili and the Rt Hon Andrew Mitchell MP, emphasising the global commitment to supporting the financial and structural resilience of SIDS, with a particular focus on youth and environmental sustainability.

During his address, the Rt Hon Andrew Mitchell MP, Minister of State (Development and Africa), remarked on the significance of the CPSL event, stating:

2024 is a major year for both Small Island Developing States and climate finance, with the Kenyan UN fourth SIDS conference in May, the Commonwealth Heads of Government meeting in Samoa in October, and COP 29 in November, where a new collective quantified goal on climate finance will be agreed. But the international system needs to do more to step up support and speed up access to climate finance for those most vulnerable. This includes institutional reform, as well as capacity building and data for small states. This is a key priority for the United Kingdom. I would also like to congratulate Professor Habib for her achievements working with the Commonwealth Secretariat, in particular her hard work and commitment to supporting SIDS to enhance their financial and climate resilience.

This initiative represents a significant milestone in developing sustainable financial solutions for SIDS, showcasing the effectiveness of innovative finance models in fostering social, economic, and environmental resilience.

About CRSD

The Centre for Resilience and Sustainable Development (CRSD) at the University of Cambridge is dedicated to advancing research and solutions for sustainable development challenges worldwide, with a focus on resilience building and innovative financial models to support environmental sustainability and youth empowerment.