Singapore Global Centre
Digital Sustainable Finance
There is an annual financing gap to achieving the SDGs of around US$4 trillion each year. Given that the SDGs seek to overcome existing global challenges through economic transformation, inequality reduction and environmental protection, the failure to close the financing gap threatens the livelihoods of billions on the planet. The challenge is further compounded by factors such as donor over-reliance, inability to marshal collective mobilization of private sector capital, lack of transparency, and misalignment of incentives. Digital finance underpins catalytic innovations that can address existing barriers or unlock new pathways for the financing of national development needs. Identifying and leveraging new forms of finance, in addition to enhancing existing SDG financing channels, will be crucial. Closing the financing gap will also involve a coordinated effort from developed and developing nations. This will also involve overcoming the challenges posed by the existing fragmented and complex international climate financing system. A recent survey to which 37 UNDP country offices responded show that digital finance is a priority in many countries yet only 40% have a digital finance strategy and the understanding of the nexus of digital finance and sustainability is moderate. The Sustainable Finance workstream within the Global Centre, in close collaboration with the UNDP Sustainable Finance Hub provides actionable strategic guidance to UNDP around the world, shaping and brokering partnerships with innovators, building skills and knowledge, and highlighting the importance of sustainable finance for sustainable development.
How Technology Can Help
Technology can help provide the foundations and catalysts for accelerating impact and delivering on the positive promises of digital transformation. This includes supporting and scaling innovations with sustainable financing mechanisms, particularly around digital payments and digital currencies, but also driving knowledge around key issues of financial inclusion through digital finance and fintech. There is also potential to contribute to building inclusive, equitable and safe digital foundations through the discovery and adoption of digital public goods – from the digital finance ecosystem, but also more broadly. To close the SDG financing gap, technologies such as blockchain and big data can help to increase transparency and reliability of information to increase the trust of potential investors. For instance, blockchain technology can help to improve the validity, trust, and accountability of data in the climate financing domain, an area said to be “riddled with glaring data gaps” and in dire need of greater transparency. Blockchain technology could also be used to tackle corruption in national governments and improve investor confidence in funding potential SDG projects by allowing investors the ability to know, in real-time, how their funds are being utilised.