14 March 2019, New Delhi: The Sustainable Development Goals Finance Facility (‘SFF’ or ‘the Facility’) was launched yesterday by Achim Steiner, UN Under-Secretary General and Administrator of the United Nations Development Programme (UNDP). The SFF is a platform that will incubate innovative financial instruments aligned to the SDGs that will catalyse funding for improved social and developmental outcomes in India. The Facility is an initiative of UNDP in partnership with the Swiss Agency for Development and Cooperation (SDC), financial services firm KPMG and Social Finance India, a TATA Trusts backed not-for-profit.
At the launch event, Achim Steiner said, “India is pivotal to our shared ambition to achieve the Sustainable Development Goals. Innovative finance through structures such as guarantees, social insurance, social impact bonds and impact investments, holds the key to unlocking private investment capital for the SDGs, particularly in a middle-income country like India. The SDG Finance Facility leverages a strategic multi-stakeholder partnership with leading institutions in the ecosystem to tap into resources and agility of the private sector to solve some of today’s most pressing challenges.”
India currently has more than 50 impact investment funds, which means much less bang, or impact, for each investment buck. This fragmented and disconnected approach to SDG finance adds up to a duplication of resources and lack of focus on priority goals – leading to multiple innovative instruments competing for the same pool of capital, higher transaction costs, lower success rates and a focus on splitting the pie rather than enhancing it. By building a multi-stakeholder platform, the SFF aims to encourage major players in the sector to pool resources, capacities and experience, thus aligning their strategic interests.
Though a great deal of attention is given to instruments raising capital, an often-overlooked area in financing is the journey of ideating, scoping, evaluating and strategizing to create the right set of investible instruments or products. The ability to attract SDG Finance depends to a large extent on how instruments are structured. This is an area that requires multiple stakeholders with complimentary areas of competence.
The Facility will work towards mobilise financing for several focus areas, including municipal finance, exploring the use of CSR funds for innovative finance, SDG Electronic Traded Funds and policy work around SDG bonds. The Facility will design instruments that balance the needs of product beneficiaries and funders, develop an effective go-to-market strategy, and build the wider ecosystem. Dr. Rajiv Lall, Chairman, Social Finance India, said, “The SDG Finance Facility builds on the mission and purpose of the global Social Finance network and we hope to leverage our learnings and experiences across markets to bring innovations to India”.
Tamara Mona, Deputy Head of Mission, Embassy of Switzerland said, “The Swiss Agency for Development Cooperation, as part of its focus on climate resilient cities in India, is keen to support partner city governments to explore innovative financing mechanisms to stimulate their transition towards resilient and sustainable development pathways”. Arun Kumar, Chairman and CEO KPMG India, added, “To achieve the SDGs, India will need innovative ways of financing; the SDG Finance Facility is an example. KPMG has a strong focus on the impact investing space and we are proud to be the knowledge partner in this important initiative.”
UNDP will chair the steering committee and be responsible for its overall coordination and supervision, as well as provide delivery support. Dr Rajiv Lall, Chairman, Social Finance India will co-chair the initiative and with Social Finance serving as the pillar lead for the work around health impact bonds, leveraging its considerable expertise with innovative financial instruments and pay-for-success mechanisms. KPMG will act as the knowledge partner for the Facility, building on its experience with green finance in India. The Swiss Agency for Development and Cooperation will bring its experience with supporting municipal and climate finance platforms in India and across the region. Government partners on the steering committee include NITI Aayog, the government’s think tank on public policy issues, and the National Institute of Public Finance and Policy.
By 2021 the Facility aims to launch instruments and models that would be able to catalyse over $100 million of incremental private sector capital to address priority social and developmental challenges in line with the Government of India’s development vision.
On the ground in about 170 countries and territories, UNDP works to eradicate poverty while protecting the planet. We help countries develop strong policies, skills, partnerships and institutions so they can sustain their progress.
UNDP has worked in India since 1951 in almost all areas of human development, from systems and institutional strengthening to inclusive growth and sustainable livelihoods, as well as sustainable energy, environment and resilience. UNDP’s programmes have and continue to fully integrate a global vision for catalytic change with India’s national priorities. Today, UNDP India works to achieve the Sustainable Development Goals by transforming traditional models to do development differently.
About NITI Aayog
NITI Aayog was formed via a resolution of the Union Cabinet on January 1, 2015 and is the premier policy ‘Think Tank’ of the Government of India, providing both directional and policy inputs. While designing strategic and long-term policies and programmes for the Government of India, NITI Aayog also provides relevant technical advice to the Centre and States. It is also the nodal agency for the SDG’s in India.
About Social Finance India (SFI)
Social Finance India, is an Indian non-profit intermediary, supported by the TATA Trusts and the Omidyar Network, which seeks to galvanize the Indian impact investment space. As part of the global network of Social Finance (across UK, US and Israel), it seeks to mobilize investment capital to drive social change. Social Finance collaborates with government, non- profits, for-profit impact enterprises, philanthropic foundations, and impact investors to co- create new and also scale up financing for SDG-aligned programmes.
About National Institute of Public Finance and Policy (NIPFP)
NIPFP is a centre for research in public economics and policies. Founded in 1976, the institute undertakes research, policy advocacy and capacity building in areas related to public economics. One of the major mandates of the institute is to assist the Central, State and Local governments in formulating and reforming public policies by providing an analytical base. The institute was set up as an autonomous society, at the joint initiative of the Ministry of Finance, Planning Commission, several State governments and distinguished academicians.
SDC is the agency for international cooperation of the Swiss Federal Department of Foreign Affairs (FDFA). SDC has been a partner of India for more than 60 years. Since 2011, SDC’s engagement focuses especially on climate change and environment. SDC facilitates Swiss expertise for innovative actions to address the causes and effects of climate change, contributes with evidence-based experiences to policy processes and generates scientific and applied research-based knowledge for capacity building and awareness.
KPMG India is a leading professional services firm, part of the global KPMG network often regarded as one of the Big Four accounting firms. It is one of the leading providers of risk, financial, business, advisory, tax and regulatory services, internal audit, and corporate governance and has done extensive work around sustainability and CSR advisory.
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