Investment for sustainable recovery

Posted On April 23, 2021

Photo: chaiviewfinder/Shutterstock.com

 

The planet has just offered us a glimpse of the potentially devastating effects should we fail to achieve the Sustainable Development Goals. The COVID-19 pandemic forced us to rethink our values and proved that we need to redesign the system that balances economic, social and environmental factors to save our world. It is not an unknown fact that a large share of the resources needed to finance the development agenda should come from the private sector. This is even more valid today with decreasing public resources as a result of COVID-19.

As eloquently phrased by Christine Lagarde, President of European Central Bank, a sustainable future requires the international community to implement the three mutually reinforcing “ins”: include externalities and elements not accounted for, inform through disclosures and other means, and invest – particularly in innovation.

The UN system, along with international community, has been drawing attention to the fundamental role that the private sector and other development partners need to play.

The recent 2021 Financing for Sustainable Development Report (FSDR) of the Inter-agency Task Force on Financing for Development recommends putting forward solutions to mobilize investments in people and in infrastructure.

In addition, the G20, to address challenges to promoting sustainable finance, established “Sustainable Finance Working Group” and with the Finance Track’s Communiqué, under Italian Presidency, the Group reiterated their commitment to work towards increasing dialogue between public and private investors to mobilize private capital.

The history of private sector engagement in the policy and practice with development issues, on the other hand, is controversial, with examples of powerful industry groups and businesses lobbying and acting without considering their impact on people and planet.  

The good news is that these actors are now outnumbered by genuine transformational partners who support sustainable development and drive system-wide changes. Among them, UNDP and its partners have implemented several initiatives in this regard.

Investors, businesses and other private sector actors spend significant effort to work with international development institutions, governments and civil society organizations. They see themselves as partners to achieve the 2030 Agenda. Investors share with UNDP that they are fully aware that sustainable development is essential, not only for the well-being of people and planet, but also for the future of their businesses. They also requested guidance on how to direct their investment capital towards the Sustainable Development Goals as they lack the necessary guidance and tools. They are therefore moving from a niche market approach and corporate social responsibility to mainstreaming sustainable finance in their business models.

Using principles to link investments to SDGs and/or only avoiding harm are no longer sufficient. We need to transform the economic system into a regenerative, sustainable and equitable one.

Against this backdrop, UNDP established the guidance needed by investors and created tools for them. It brought all these pieces together at the UNDP’s SDG Finance initiative SDG Impact. As a product of this initiative, UNDP and the UN SG’s Global Investors for Sustainable Development Alliance launched a new SDG Investor Platform on 14 April. It includes:

·        A game-changer tool that provides private sector investors with access to country-level market intelligence, including on-the-ground insights into the local investment landscape and investor connections that allow investors to identify the impact/sustainability areas that come with high return.

·        Global decision-making standards that provide practical guidance for businesses, bond issuers and investors to embed (economic, social, and environmental) impact considerations into their decision-making and day-to-day operations to maximize their positive contribution to sustainable development. The standards aim at transforming the way we do business and investing to achieve the SDGs.

As the next step, the UN system is working with partners to bring project pipelines from government and private sector into the Platform.

 “A planet in trouble” is an urgent call to action for all. Investors need to embed the SDGs into their core business practices. Communities need to demand this behavioral change from investors and impact ecosystem stakeholders need to work together in a more harmonized and effective way. The SDG Investor Platform is one of the UN’s contribution. We call for all actors to join us and form partnerships to ensure a clear path towards the 2030 Agenda.