Ana Maria Lebada from the SDG Knowledge Hub of the International Institute for Sustainable Development (IISD) provides an update on a high-level meeting on SDG financing in New York.
High-level Meeting on SDG Financing Calls for Better Data, Long-term Investment
During the UN Secretary-General’s High-level Meeting on Financing the 2030 Agenda for Sustainable Development, representatives of governments, academia and the private sector highlighted the need to focus investments on long-term gains, the most vulnerable countries and sectors, and better data for measuring both the SDGs and sustainability at large.
The event took place on 24 September 2018, at UN Headquarters in New York, US. The meeting focused on three priorities for scaling up financing for the SDGs: aligning global financial and economic policies with the 2030 Agenda; enhancing sustainable financing strategies; and seizing the potential of financial innovations, new technologies and digitalization to provide equitable access to finance.
Opening the meeting, UN Secretary-General Antonio Guterres noted that while efforts to achieve peace require a surge in diplomacy, efforts to achieve the SDGs require a surge in financing and investments. He stressed the need for women to have equal access, be equally represented in decision making, and be equally considered in how investments are made. The Secretary-General proposed focusing on the following objectives:
- All developed countries must meet the commitments they made in the Addis Ababa Action Agenda (AAAA) on financing for development;
- We must continue to support developing countries in creating conditions for mobilizing domestic resources, including tax reform and other good governance measures; and
- We need to step up efforts in developing innovative financing and in mobilizing private investment.
Christine Lagarde, International Monetary Fund (IMF) Managing Director, announced that the IMF has done analytical work to see what it will take for low-income developing countries to meet the SDGs, looking at five areas that are critical for sustainable and inclusive growth: education, health, water and sanitation, roads, and electricity. She said countries investing in these sectors will address deficits in human capital and physical infrastructure, which represent a drag on their income and future prosperity. Lagarde cautioned that debt burdens are rising, with 40% of low-income developing countries being now at high risk of debt distress or in debt distress. She also emphasized that foreign aid remains crucial, and preferably takes the form of grants. She said advanced economies can do more, and can better target their aid budgets to support countries most in need. She highlighted that while budget conditions are tight in many advanced economies, returns on well-targeted aid—in terms of poverty reduction, job creation, and improving security and stability—are very high.
Justin Trudeau, Prime Minister of Canada, underscored that investments should focus on the best return in the long term, rather than the best return in the short term. He called for securing more solid flows of capital to the most vulnerable countries and sectors, such as infrastructure, which will bring key long-term returns.
Mia Amor Mottley, Prime Minister of Barbados, said small island developing States (SIDS) should be at the frontline of fighting climate change instead of being the victims of climate change, but they do not have the resources. She called for a hospitable and equitable international environment, supportive of SIDS’ needs and priorities. Jusuf Kalla, Vice President of Indonesia, invited a focus on enhancing the performance of national economy.
Laurence D. Fink, CEO of BlackRock, noted that 35% of today’s workforce is comprised of millennials, who have made it clear that they want to work for purpose-driven companies, and the SDGs provide the companies with an opportunity to respond to that demand. Emphasizing the need for better data on sustainability, Fink said that as more companies report on sustainability, data will improve and more capital will flow into sustainability.
Robin Shanahan, CEO of PIMCO, said the SDGs provide capital markets with the objectives they need to align themselves with sustainable development. She emphasized the importance of sustainable development bonds.
Mark Wilson, CEO of Aviva Group, underscored the need for transparent, consistent, free, and simple benchmarks that actually measure the SDGs. He highlighted the work of the World Benchmarking Alliance to that end. The World Benchmarking Alliance was launched on the evening of 25 September 2018. It is funded by Aviva, the Index Initiative, and the UN Foundation.
Philippe Le Houérou, International Finance Corporation (IFC) CEO, called for being more proactive in approaching investors rather than waiting to be approached by investors. He recommended using ODA to leverage private investment and strengthen domestic markets to attract investors, explaining that if we “don’t create but destroy markets,” we will not go from billions to trillions but from billions to millions, and fail in SDG implementation.
Bill Gates, Founder, Bill & Melinda Gates Foundation, emphasized that the financial system needs to evolve to support developing countries, with foreign aid being a fundamental pillar. While they are not a substitute for public investment, he said private sector and foundations can help as well. He explained that philanthropic foundation can: use challenge grants to seek innovate approaches to deep-seated challenges; de-risk investments; partner with others (such as development banks) to scale up successful projects; and increase the impact of innovative collaborations, an example of which is Gavi, the Vaccine Alliance.
Kristalina Georgieva, CEO of the World Bank Group, said the Bank is working on the launch of a youth bond to connect financial markets with the purpose embedded in the SDGs. Mary Ellen Iskenderian, CEO of Women’s World Banking, emphasized that financial inclusion for women is imperative, as studies show that women choose to invest exactly in the issues the SDGs are about.
Ashish Thakkar, Founder, Mara Group, noted that digitalization will be key to formalizing the informal sector. He also highlighted the need to give access to finance to women and youth entrepreneurs, to that end. He announced that the Mara Group will produce the first quality, affordable, African-made smart phones to enable this.
In the ensuing discussion, participants raised issues related to: the need for regional integration, especially in Africa; strengthening governance institutions to improve the business environment; the potential of pension funds to provide needed investments in the SDGs; the need to support fragile states; the need for a global corporate tax reform that makes companies pay their fair contributions; the increase of public risks from private investments; and the need to invest in women.
Closing the meeting, Liu Zhenmin, head of the UN Department of Economic and Social Affairs (DESA), underlined that investment in sustainable development reduces volatility. He said while the UN cannot invest, it provides a vehicle for promoting the momentum to invest in the SDGs and is committed to providing impartial support to Member States. UN Deputy Secretary-General Amina Mohammed noted three key messages from the meeting: domestic resources are important; the return of investments in the 2030 Agenda “go a very long way”; and reaching everyone requires that we be innovative.