Financing Sustainable Development – The Challenge
The financing for sustainable development is available, given the size, scale and level of sophistication of the global financial system – with gross world product and global gross private sector financial assets estimated at over US$ 80 trillion (World Bank Databank, 2017) and US$ 200 trillion respectively (Allianz Global Wealth Report, 2018). However, available finance is not channeled towards sustainable development at the scale and speed required to achieve the SDGs and goals of the Paris Agreement. The financing gap to achieve the SDGs in developing countries is estimated to be US$ 2.5 – 3 trillion per year (UNCTAD World Investment Report, 2014).
Channeling available finance towards the SDGs is constrained by a range of challenges including:
- Uneven economic growth and unsustainable patterns of production and consumption; rising inequality and debt levels; and the devastating impacts of conflict and climate change, especially for most vulnerable.
- Limited fiscal space and institutional capacity to formulate a pipeline of bankable SDG investment projects, and weak financial systems.
- Misaligned incentives and regulations, limited awareness, and difficulties in identifying, measuring and reporting on sustainable investments.
At the same time, financing sustainable development brings new, exciting opportunities. Evidence shows that investing in the SDGs makes economic sense, with estimates highlighting that achieving the SDGs could open up US$ 12 trillion of market opportunities and create 380 million new jobs, and that action on climate change would result in savings of about US$ 26 trillion by 2030 (Business and Sustainable Development Commission, 2017; Better Business Better World; Report of the Global Commission on the Economy and Climate, 2018).
The Secretary-General’s Strategy and Roadmap for Financing the 2030 Agenda
The UN Secretary-General released a four-year Strategy for financing the 2030 Agenda for Sustainable Development on 24th September 2018 during a High-level Meeting at UN Headquarters in New York. The Strategy underscores the UN’s critical role in supporting and accelerating the mobilization of finance. It focuses on three objectives to transform the financial system from global to local levels in support of the 2030 Agenda by addressing the barriers that constrain channeling finance towards sustainable development, and leverage opportunities to increase investments in the SDGs at scale:
- Aligning global economic policies and financial systems with the 2030 Agenda.
- Enhancing sustainable financing strategies and investments at regional and country levels.
- Seizing the potential of financial innovations, new technologies and digitalization to provide equitable access to finance.