Achim Steiner, UNDP Administrator: Speech at the High-Level Political Forum on Sustainable Development Side-Event: “Revitalizing the Global Partnership - Joint action for mobilizing resources for sustainable development”

Jul 18, 2017

Joint action for mobilizing resources for sustainable development is essential to implementing Agenda 2030. Credit: UNDP

As prepared for delivery.

As we gather in New York for the follow-up and review of the 2030 Agenda for Sustainable Development at the global level, we hear two recurrent issues in almost all discussions: the importance of strengthening partnerships and mobilizing resources for the implementation of this ambitious agenda. 

The financing needs are no doubt massive. The challenge is not only to mobilize all sources of finance –domestic and international, public and private– but also to align financing flows and policies with sustainable development priorities. 

There is no shortage of capital in the global economy. For instance, Credit Suisse has valued the global household wealth stock at US$256 trillion—50 percent of this held by 1 percent of the population.  International institutional investors with long-term liabilities, such as pension funds, life insurance companies, endowments and sovereign wealth funds, hold an estimated US$115 trillion in assets under management, which is a significant potential source of finance for sustainable development objectives.  

By some estimates, the official sector and asset managers currently hold as much as $8.5 trillion in sovereign bonds earning negative interest rates, and $40 trillion earning very low returns – given the recent efforts by many central banks to have zero, or even negative, interest rates. With the massive investment needs and opportunities for real returns around the world – from infrastructure needs in both developed and developing countries to opportunities in innovative firms working on the frontier of science and technology – this is a global financial system that, at a minimum, has wide scope for further optimization.

However, the current international finance system is not efficient in channeling savings and investments to support long-term sustainable development objectives. The largest pension funds, for instance, hold 76 percent of their portfolios in liquid assets whereas they invest only 3 percent of their global assets in infrastructure and even lower in developing countries.  

Even though a small shift in the way these resources are allocated would have a substantial impact, we need to think fundamentally about the incentive structures and regulations that perpetuate this clearly sub-optimal system. Governments have a key role to play to better align private sector incentives with sustainable development objectives through strengthened policies and sound institutional, legal and regulatory frameworks. 

The good news is that the interest of the private sector in linking investments to sustainability objectives has been growing. The Global Impact Investing Network estimates that the total portfolio value of impact investment is US$114 billion -with an estimated 26 percent growth in commitments in 2017, and that sixty per cent of impact investors are aligning their portfolios to the SDGs. The private sector’s involvement has also been on the rise in corporate social responsibility initiatives, philanthropic giving, and inclusive business approaches. These developments all have the potential to support efforts to achieve the SDGs.

Effective domestic resource mobilization is at the core of financing sustainable development. Enhancing the capacity of tax administrations and widening the tax base are vital for effective resource mobilization. However, we see that performance varies significantly across countries. Those countries that have narrow tax bases because of dependence on a few commodities and large informal sectors also see their domestic revenues fluctuate with the changes in commodity prices. 

Reforms that phase out harmful subsidies such as inefficient fossil fuel subsidies can also play an important role not only in creating fiscal space but also in “getting prices right” to reflect externalities such as environmental impacts.

Let me give you a concrete and practical example of our efforts to support countries to mobilise more domestic resources in support of the SDGs. The joint UNDP-OECD initiative “Tax Inspectors Without Borders” currently facilitates targeted tax audit assistance programmes in 19 developing countries to help build local capacities to tackle complex tax questions. These programmes have already resulted in an additional USD 278 million in tax revenues being mobilised. This initiative is an example of how Official Development Assistance can play a catalytic role in strengthening domestic resource mobilization. 

ODA remains crucial in many developing countries, especially those that have the least capacity to raise domestic resources and those that are most vulnerable to shocks such as disasters caused by natural hazards and conflicts. 

ODA can also have a catalytic impact in building the capacity to access a wide range of financing instruments. In 2016 alone, UNDP helped countries access $3.1 billion in over 140 countries through our strong partnership with environmental funds. These grant investments leveraged another $14 billion in co-financing to support countries’ sustainable development priorities. 

In response to growing demand, UNDP is supporting 18 countries to undertake Development Finance Assessments (DFAs) that provide a comprehensive assessment of their financing landscape, including both financial flows and policies, and help governments to explore how to more effectively harness them.  DFAs can be a baseline for integrated national financing frameworks that the Addis Agenda calls for. 

Efforts to increase the volume of financing for development must be accompanied by efforts to strengthen the quality of those resources. Enhancing the effectiveness of development cooperation – including through strengthening county ownership, a focus on results, inclusive partnership, and transparency and mutual accountability – will support the achievement of the SDGs. 

In this regard, the work of the Global Partnership for Effective Development Cooperation (GPEDC) as a voluntary, multi-stakeholder platform is critical. UNDP is actively supporting the co-chairs of the GPEDC, Bangladesh, Germany and Uganda to translate the ambition of the Nairobi Outcome Document into practical impact. GPEDC’s country-led monitoring in over 80 countries and territories remains a crucial barometer of tracking effectiveness of development cooperation. 

To conclude, I would like to thank Germany and Norway for organizing today’s event on this important topic. UNDP is dedicated to supporting Member States in defining sustainable development financing strategies and building partnerships to achieve the SDGs.

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