Infrastructure Investment

Infrastructure plays a crucial role in the global economy. The availability of transport, communication, electricity, safe water and sanitation, health infrastructure and other basic facilities has a tremendous impact on improving the quality of life and well-being. Infrastructure facilities and services are instrumental to efficient production, transport and trade that all spur economic growth, which in turn helps in reducing poverty. Recognising the essential role that long-term financing for investment plays in supporting strong, sustainable, balanced and inclusive growth, G20 Finance and Central Bank Deputies established a Study Group on Financing for Investment in 2013, which was transformed into the Infrastructure Investment Working Group (IIWG) in 2014 and then into the Infrastructure Working Group (IWG) at the end of 2017.

The OECD, drawing on its longstanding expertise and extensive work on long-term investment, has been a key contributor to the G20 work on financing for infrastructure and an active member of the IIWG and IWG. In 2013, upon G20 Leaders’ request, the OECD helped develop the G20/OECD High-Level Principles for Long-term Investment Financing by Institutional Investors. Following a call from Leaders, the OECD has continued its work on institutional investors through the G20/OECD Task Force on Institutional Investors and Long-Term Financing. Recent contributions include, amongst other, the OECD Reference Note on Environmental and Social Considerations in Quality Infrastructure in 2019 or the G20/OECD Report on the Collaboration with Institutional Investors and Asset Managers on Infrastructure in 2020 (for a fuller list of selected contributions see below). With the Italian Presidency 2021 the OECD is continuing the work on long-term investment financing and the collaboration with institutional investors.

Infrastructure as an asset class

Under the Argentinian Presidency in 2018, the G20 has developed “The G20 Roadmap to Infrastructure as an Asset Class”, endorsed by Finance Ministers and Central Banks Governors in March 2018. The Roadmap aims to address common barriers to the emergence of infrastructure as an asset class, including the heterogeneous nature of infrastructure assets, the lack of a critical mass of bankable projects and insufficient data to track asset performance. The Roadmap is a major step to mobilize more private infrastructure investment, and particularly in infrastructure that support sustainable growth. The OECD has been a key supporter of the G20 agenda to develop infrastructure as an asset class in particular on the diversification of financial instruments for infrastructure and on addressing data gaps.

In order to support these efforts, the OECD, along with the World Bank, prepared a Stocktake of Tools and Instruments Related to Infrastructure as an Asset Class. The stocktake identifies numerous gaps for further consideration by the G20 and other fora; including implementation of existing instruments, standardisation, and also the need for new guidance for instance on the treatment of new technologies such as blockchain. The OECD also acts as the Secretariat and contributes to the Infrastructure Data Initiative, which brings together MDBs and other stakeholders including private investors, with the aim to address data gaps and information asymmetries that hinder infrastructure investment.

Under the Japanese G20 Presidency in 2019, the G20 enhanced its attention to quality considerations of infrastructure development and investments. It notably adopted the G20 Principles for Promoting Quality Infrastructure Investment, covering issues such as the economic efficiency in view of infrastructure life-cycle cost, the integration of environmental and social considerations in infrastructure investments, infrastructure governance and resilience against risks including natural disasters. The OECD supported these efforts, notably with the OECD Reference Note on Environmental and Social Considerations in Quality Infrastructure, the OECD/IMF Reference Note on the Governance of Quality Infrastructure Investment and the OECD Compendium of Policy Good Practices for Quality Infrastructure Investment. In addition, the OECD, in collaboration with the Global Infrastructure Hub and the World Bank, is supporting the Quality Infrastructure Investment Database. This joint initiative brings together different reports and analysis related to quality infrastructure investment.

During the Presidency of Saudi Arabia in 2020, adopting the G20 Riyadh InfraTech Agenda, the G20 turned its attention to the role of technology in helping countries make well-informed infrastructure-related decisions and achieve more efficient financial outlays, by mobilizing private sector investment, by enhancing service delivery and by achieving environmental, social and economic benefits. The G20 also further advanced the quality infrastructure and infrastructure as an asset class agendas. The OECD produced the G20/OECD Report on the Collaboration with Institutional Investors and Asset Managers on Infrastructure, which was welcomed by G20 Leaders and reflects investors’ views on issues and challenges affecting private investment in infrastructure. In addition the report presents a set of proposals to improve the investment environment for infrastructure. Given the impact of the COVID-19 pandemic, the G20 further discussed the role of infrastructure investments as part of recovery efforts and the importance of the crisis-resilience of infrastructure systems. On the latter, the OECD supported the G20 with the OECD's Progress Note on COVID-19 and a New Resilient Infrastructure Landscape – October 2020.

The OECD will continue to work on these topics in 2021 with the Italian G20 Presidency.