In a few weeks, the global development community will come together at the UN to assess progress on the Sustainable Development Goals (SDGs) at the High-Level Political Forum on Sustainable Development. Three years into SDG implementation, we know one thing for sure: We will not achieve this ambitious agenda without significant financing. Current estimates suggest that achieving the SDGs will require $5-7 trillion in annual investments – a figure that will be impossible to meet without participation by, and collaboration between, government, the private sector, and civil society.
The good news, however, is that we have seen a host of actors step up to the challenge. Here are three actions that should give us cause for optimism as we continue to work toward making the SDGs a reality:
- Leveraging Blended Finance
Traditional overseas development assistance won’t be enough to fund the SDGs at the scale that is needed, particularly for least developed countries (LDCs) and lower-middle-income countries, which require an estimated $1.4 trillion per year to achieve the SDGs. We know, however, that we have access to these funds. With an estimated$5 trillion in global markets, the question is now how best to mobilize new approaches to leverage it.
Blended finance– generally defined as the use of public funds to mobilize private ones –could provide a promising solution. This tool can significantly reduce the burdens on multilateral development banks and international financial institutions by freeing up more domestic resources, particularly for LDCs.
That’s the idea behind the recently established Blended Finance Taskforce, which brings together leaders from the investment and development finance communities to increase private investment in the SDGs. An upcoming report on blended finance in LDCs will be launched on the margins of the 2018 UN General Assembly and will also provide better understanding about how we can promote effective financing for the regions that need it most.
- Fostering Innovative Mechanisms and Models
Over the past several months, we have seen a proliferation of innovative mechanisms and models for SDG financing by the development community. Examples include:
- blue bonds to support development of marine resources and seafood value chains,
- humanitarian impact bonds to finance humanitarian assistance in fragile and conflict settings,
- the launch of the Global Concessional Financing Facility to support refugee populations and host communities in middle-income countries,
- the inauguration of the Technology Bank for Least Developed Countries,
- the upcoming replenishments of the Global Financing Facility and the Global Fund, and
- the continued scaling up of green bonds –up 78% between 2016-2017 and anticipated to more than double in 2018 –to promote renewable energy and climate action.
Infrastructure, resilience, and insurance have also been areas of strong focus as we work to mitigate the devastating effects of global health crises and severe weather. The Pandemic Emergency Financing Facility aims to stave off the effects of severe pandemics, estimated to cost the global economy roughly $570 billion, or 0.7% of global income, annually. And the first-ever SDG Investment Fair, held in April, provided a unique forum to bring together UN Member States and the private sector to focus on implementing concrete infrastructure projects, including for small island developing states that bear the brunt of the devastating effects of climate change. These examples, while bold and ambitious, will require concerted leadership and cooperation by all partners to grow to the levels needed for long-term success.
- Mobilizing the Investor Community
Building on the findings of the Business and Sustainable Development Commission’s flagship report–which outlined an economic prize of up to $12 trillion for companies that integrate the SDGs into their core business models –the business community has stepped up in exciting ways, with institutional investors at the forefront.
Blackrock CEO Larry Fink’s bold annual letter to CEOs this year urged business leaders to embrace long-term thinking and go beyond quarterly performance, stating that financial performance depends on understanding “the societal impact of your business as well as the ways that broad, structural trends –from slow wage growth to rising automation to climate change –affect your potential for growth.”
Investors have also internalized this call to action at the national level – including through initiatives such as the Dutch SDG Investing Agenda, which pledges to identify and address “actual and perceived regulatory barriers and incentives to SDG investment – and at the local level, including through the Investor Summit on Climate Risk, convened by Ceres, the UN Foundation, and the UN Office for Partnerships to highlight climate-related investment risks and opportunities.
This month’s G7 Summit also encapsulated this shift when almost 300 investors representing over $30 trillion in assets under management committed to elevating and accelerating action around infrastructure financing, women’s leadership in finance, and climate-related financial disclosures.
These examples are a step in the right direction, but the scale and ambition of our efforts must increase if we are to deliver a better world by 2030. UN Secretary-General António Guterres’ planned summit on SDG financing this September will be an important moment to galvanize momentum and keep moving beyond rhetoric to focus on real impact. With 12 years left, our runway for delivering the goals we’ve set for ourselves is getting shorter by the day.
Let’s work together to finance a sustainable future where everyone has an equal opportunity for peace, prosperity, and success.