As prepared for delivery.
I am pleased to connect with you at the Responsible Business Forum on Sustainable Development 2017.
UNDP is pleased to be a co-organizer of this Forum which brings together committed business leaders, key policy makers, NGOs, the media and the United Nations family to explore partnerships to tackle persistent development challenges.
I would like to take this opportunity to thank the government of Singapore for being strong stewards of the SDGs, and for the continuous support and partnership with UNDP.
Globally, and in the Asia-Pacific region, we are faced with both development challenges and opportunities. This region’s tremendous GDP growth, over 7.5 per cent per year on average over the period 1990-2015, has transformed economies and people’s lives. Except for three countries; the region is now comprised of either middle or high-income countries. Asia-Pacific’s share in global GDP is now over 30 per cent, and is expected to rise to 55 per cent by 2050.
Poverty reduction in Asia-Pacific has also been enormous. Since 1990, over 1.2 billion people around the world have been lifted out of extreme poverty, with East Asia and the Pacific accounting for almost 900 million of those people.
High and sustained economic growth is leading to a rapidly expanding middle-class. By 2030, two-thirds of the global middle class will be Asian.
However, greater material prosperity also brings with it a set of inter-related challenges. While the region’s middle-class is expanding, the divide between those at the top and those at the bottom of the income ladder has widened. Moreover, a growing middle-class will further increase the demand for natural resources. Such resource-intensive growth will further burden the environment with potentially devastating consequences. And aspects of the 4th industrial revolution, including artificial intelligence, bio-technology, quantum computing, and the Internet of Things are likely to transform entire systems of production, management, and governance.
The future, in a very real sense, is likely to make a break with the past and therefore has implications for how we confront this set of inter-related challenges.
These challenges are so massive and pressing that they need an ambitious response: The Sustainable Development Goals. Despite the high level of ambition required, the SDGs are achievable if stakeholders work together, co-innovate and develop collective action. This Forum is an excellent platform for all of us to explore such partnerships, between the public and private sector, among private companies, and to learn and share experiences across countries.
At the UN/UNDP, we firmly believe that the private sector is an indispensable partner in pursuing the SDGs. In Least Developed Countries, the private sector is estimated to account for 60 percent of GDP, while generating 90 percent of jobs and 80 percent of capital inflows. Private companies are also indispensable in providing goods and services, financing social and economic investments through taxes, and creating innovative solutions to help tackle development challenges.
The business case for the private sector to invest in the SDGs is clear. By developing new business models to meet the demands of the base of the pyramid (people living with less than US$10 per day in purchasing power) and by investing in sustainable approaches in areas such as agriculture, cities, energy and health, new economic opportunities of up to US$12 trillion could be generated.
An essential element of the role of the private sector in implementing the SDGs is the need for private capital to be channeled to the right businesses models and SDG related investment opportunities. Currently, the SDGs require US$3.9 trillion in annual funding. Yet, official development assistance (ODA) and philanthropic contributions are only expected to cover a small portion of the total amount. While domestic public funds also need to increase, this still leaves us with the need to mobilize more than US$2.5 trillion every year.
The good news is that we are seeing a growing number of private assets being managed under environmental, social and governance (ESG) standards, an estimated 26% or $22.89 trillion of all investment in North America, Europe and Asia. Europe leads the way but in Asia less than one percent falls under such standards. The real opportunity now is to both grow the value of assets under ESG standards, while moving these assets from a do-no harm approach to a positive engagement one. Niche markets such as impact investing and blended finance can help redefine opportunities, vehicles and instruments to support this change. For instance, if only 10 percent of the annual ODA were allocated to leverage private sector investments, an additional US$100 billion annually could be mobilized for developing countries.
UNDP is prepared and committed to partner with the private sector to support achieving the SDGs. I would like to highlight four areas for potential partnerships:
First, convening partners to unlock new business opportunities and accelerate responsible business. Governments are still the custodians of the SDGs. An enabling environment informed by the needs of all stakeholders and that encourages inclusive and sustainable business models and innovation is critical. UNDP through its convening power can bring together multiple stakeholders to create SDG sensitive investment climate through innovative public policy and legislative reforms.
Second, catalyzing opportunities to promote responsible business practices, by minimizing risks of shocks and crisis. This includes providing incentives and de-risking investments to support the private sector to become agents in tackling social, environmental and economic challenges; integrating SDGs into core strategies and operations of companies of all sizes to ensure that economic and social benefits from business activities are maximized; and supporting companies to grow while impacting SDGs and improving business effectiveness throughout the value chain.
Third, unlocking capital by offering a selection of investment ready opportunities. UNDP is prepared to engage with companies and the financial industry to support the proactive engagement of private capital for the SDGs and to invest in high impact areas. To facilitate this, UNDP is testing ideas and has established impact investment platforms – such as the UN Social Impact Fund – and promoted Islamic Finance for measurable environmental and social results – such as leveraging Zakat for renewable energy projects in Indonesia.
Fourth, promoting innovation and scaling up partnerships. New technologies and innovation emerging from the private sector and governments can tackle development challenges at scale. Blockchain, big data, internet of things, and artificial intelligence are changing the way we identify development solutions. UNDP recognizes the importance and potential of innovation. Our very first Innovation Champion for UNDP Asia-Pacific will speak later in the programme on the importance of innovations and technology to achieve the SDGs.
These are just a few highlights of our approach which can be further explored in the Forum over the next couple of days.
On behalf of UNDP, I would like to thank our partners at the Responsible Business Forum, Global Initiatives and the venue host, the Marina Bay Sands for working with us in shaping an exciting agenda for the next two days.
I commend all participants for your commitment to contributing to the SDGs and to creating innovation for sustainable growth. We need your voice to promote and spread the narrative that being responsible is not only right for business, but also good for business.