Launch of Financing for the Sustainable Development Goals (SDGs) and the Paris Climate Agreement: The UN Ecosystem of Initiatives on Private Sector Finance
On July 13, 2021, on the virtual sidelines of the 2021 United Nations High-level Forum on Sustainable Development in New York – the HLPF,
The paper was put together with the support of UNCTAD, UNDESA, UNEP, UNEP, UNECE, UNCDF, UN Global Compact, IFAD for which we thank them.
Felix Dodds - input to the side event:
"The delivery of the 2030 Agenda for Sustainable Development was estimated after it was agreed by several organizations from UNCTAD, the World Bank to the Sustainable Development Solutions Network to be in the region of US$3-$5 trillion annually. With the impact of COVID 19 that will have to be re-calculated
This dwarfs the contribution from Overseas Development Aid which in 2020 was $161 billion. This was of course in a year which the world faced an unprecedented challenge from the Covid-19 pandemic – the affects we will not really know for years but which has according to the World Social Report 2020 increased income inequality in most countries. The Secretary General warned us:
“Income disparities and a lack of opportunities are creating a vicious cycle of inequality, frustration and discontent across generations.”
There will need to be a refocusing of private sector finance.
In a globalized world where we are facing the challenges of addressing climate change and the COVID 19 pandemic the UN offers multilateralism a place to assist in building an ecosystem helping to redirect the financial sector to help address these and other problems such as ensuring we leave no one behind.
This slide above from Steve Waygood of AVIVA shows the capital market and the different stages of it. It also identifies the main players in the different parts. If you can change the rewards between different stages then the investments can move towards supporting good things.
The realignment of private sector finance to support sustainable development and to stop funding activities that take us in the wrong direction has accelerated since the 2012 Rio+20 conference, the adoption of the Sustainable Development Goals (2015), the Addis Ababa Action Agenda on Financing for Development and the Paris Climate Agreement.
The three top credit rating agencies S&P Global Ratings (S&P), Moody's, and Fitch Group control over 90% of the credit rating in the global market. If you build into the rating climate risk and other key sustainability issues investments would flow to the companies with good sustainability policies. So three companies changing their policies would have a huge impact on investments.
We need a new generation of policy innovation is
aiming to ensure that the financial system serves the needs of inclusive,
environmentally sustainable, economic development.
The first example of the work in the paper is that of the now UN General Assembly annual resolution Promoting investments for sustainable development
Work around the idea of requiring making it a listing requirement for companies on Stock Exchange to have to produce a sustainable development strategy and annual ESG reports was promoted by a group of investors lead by AVIVA and supported by Stakeholder Forum as part of their work for Rio+20.
This didn’t succeed in Rio+20 and in 2015 as part of Addis Ababa Financing for Development process – though both did promote the idea of companies reporting ESG.
The incoming President of the UN General Assembly Mogens Lykketoft picked up the issue during the first Financing for Development Forum in 2016 and initiated a process which produced the report Links in the Chain of Sustainable Finance: Accelerating Private Investments for the SDGs, including Climate Action
This was produced for him by the Brookings Institute and which expanded the discussion on private sector finance.
This was then picked up by the government of Nigeria who then sought and succeeded in getting an annual UN General Assembly resolution on ‘Promoting investments for sustainable development’ enabling a place where member states can look at what could be done to align investments more for sustainable development.
Changing the direction of investments so they support sustainable development and addressing climate change is one of the most important development of the last few years and as I hand back to chair Id like to thank the UN bodies who have been working on this for their work and ask stakeholders to engage in supporting their efforts.
We are only two years before the Mid term review of the SDGs and we will all need to double our efforts if we are going to get on track to deliver them by 2030. This work on private investments is now a critical part of what will get us back on track.
There is a third challenge as well as climate change and the pandemic which we aren’t addressing today but I want to flag us. President Biden in his April State of the Union address said:
Much of this is in green technology but we must ensure that it doesn’t increase inequality within countries and in particular in developing countries. The hope is it will help developing countries to jump from bad industry to greener industries. Saying this these changers it is estimated will see something like 70% of people being free lancers by 2030 – it will surely increase insecurity –
I will just say those interested in this might be
interested in my next book out in October called Tomorrow’s People and New
Technology Changing how we live our lives. There are huge challenges in the
next ten years particularly having to strengthen the role of SDG 16 in this are
to ensure transparency.
Finally, Id like to thank those of you attending and
hope you have found the ecosystem we have tried to describe as something which
you can engage in. I am sure we all here wish you a great final week at the High-Level
Political Forum good day."
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