21 Aug New Innovative Financing Partnerships for SDG Impact
The Finance Working Group of the Business and Sustainable Development Commission estimated that the Sustainable Development Goals (SDGs) will require USD 2-3 trillion of additional investments per annum out of the approximate USD 115 trillion global GDP. While the Working Group suggests this is not that daunting an investment figure, given the size, technical capacity and global reach of the global financial system, it will require its complete re-orientation towards sustainable development.
Steady and incremental progress has been made in the past decades to integrate environmental, social and governance (ESG) metrics into investment risk assessment. According to the US Sustainable and Responsible Investment Forum almost USD 9 trillion was invested according to ESG criteria in the US alone. That is more than 1 in every 5 USD under professional management.
However, the international finance community must now also respond to growing calls to align the financial system with sustainability. To do this, each and every dollar under management and on loan will eventually need to be re-oriented towards the international priorities set out in the SDGs. Doing this will require a better understanding of sustainable development risks to long-term growth and a more targeted alignment with sustainable development priorities for investors to unlock opportunities to finance the SDGs.
In April 2017, the UN launched its SDG Financing Lab, which aims to identify and pilot innovative finance instruments that can drive investment and support SDG interventions. New innovative financing partnerships that bring together industries as well as private and public stakeholders will be fundamental to unlock opportunities to finance the SDGs and enable investors to create a more positive impact. A number of such partnerships will be highlighted in the upcoming Earth Security Report 2017, as vehicles for companies to address SDG impacts that are material to their own growth and play a more strategic role in shaping the sustainable growth path of their value chains and industries.
(Photo Credit: SDG Action Event: SDG Financing Lab /Rick Bajornas / Flickr)