The United Nations Academic Impact (UNAI) is producing a series of articles related to the Sustainable Development Goals (SDGs) from various angles. In this first article, we aim for more people to get a deeper insight into the financing?and funding for sustainable development, mainly what is being done at the multilateral level, especially in the context of the United Nations system.
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In a complex context, more actors
“We are in a challenging moment. Crises like COVID-19, Ukraine, and climate change are all interrelated,” says Mariangela Parra-Lancourt, who works in the Strategic Engagement and Policy Integration Branch in the?Financing for Sustainable Development Office, which deals with the outcomes of the?, a document with?commitments from governments and other stakeholders, helping finance the energies and?development sectors.
She argues that because supply issues are associated with the ongoing conflict in Eastern Europe, every household has been impacted by the growth of inflation. And responses like the increase in interest rates and subsequent excessive debt are not necessarily the most appropriate measures. In light of these and other?global challenges, the topic of financing for sustainable development needs to be taken seriously, given the significant levels of inequality worldwide.
Her colleague Rabayl Mirza describes?the role of the private sector as “critical” because she believes all parties are expected to come to the table and bridge the gap. In the efforts to build a network for the private sector, the first phase is the?, with the idea of aligning all capital with the??and mobilizing more and new forms of financing.?
GISD key work streams include working through multilateral development banks and other regional development banks, publishing the corporate reporting and corporate sustainability reporting and disclosures to showcase the impact of both the businesses as well as investors on the SDGs, inculcating a long-term view in all types of financial decisions, and developing tools in order to?allow investors to make investments on the SDGs.?
Besides GISD, the?SDG Investment Fair?is also playing in scaling up the private sector participation in development financing. “The idea of the Fair was to have an opportunity for countries to present and bring projects that are supported by the governments and have a high impact on the SDGs. The projects brought to the Fair have focused in infrastructure to eco-tourism, green energy, and sustainable agriculture,” says?Rabayl.?
Everybody should have the option to have a decent life, yet this is not the case for many. At the same time, there are many available resources, including financial ones. Still, incentives should be created so that investors, consumers, and every stakeholder in the market can see how their decisions lead to positive and globally influential consequences. Along these lines, we need to understand better what sustainable development is and, more importantly, how we finance it.
The capital and its cost
Tewodaj Mogues, a Senior Economist at the?, views the SDGs as “a global agenda to bring about welfare improvements in a sustainable way that accounts for conditions of the climate and environment.” Mogues’ team examines how much it would cost to achieve the SDGs, and the needed expenditures for a strong performance, particularly concerning Goals centered on human and physical capital development.
From a research-oriented perspective, Dr. Mogues explains the concept of?human capital?as the one that is embedded in human beings. For instance, university students, like those in member institutions of the?United Nations Academic Impact (UNAI), see the education they are receiving and the knowledge they are learning as capital because it will create more value for themselves and the societal economy once they graduate from such institutions.?
Back to the core question related to financing, Dr. Mogues introduces a measurement tool named the?benchmarking approach?that uses an input-outcome methodology. When we estimate the cost for a given country in the case of human capital development like education, we should first find out that country’s peers’, which are or might be similar in terms of their income level. Based on existing data, we then identify those with an exceptionally high performance related to the SDGs.
The data gives researchers a sense of the performance of every country on the SDGs. For example, in the case of??Goal 4, we can find the number of teachers relative to the population, as well as their salary, as key indicators. Furthermore, one can identify similar inputs of the high-performing peers and define the values of specific indicators to be considered a benchmark. Then it is possible to determine the cost that the country under study would expend to reach such values.?
By using this methodology, Dr. Mogues once analyzed and estimated the performance and expenditure of India in the report co-authored by her, , in which she found out that concerning, in particular, the field of education, the country?certainly still has a lot of needs, but it does not need to spend more. Instead, it would need to spend its resources differently.?
Finance blending
Now, perhaps more than ever before, SDG financing requires some innovative blending of finance, in the opinion of Lisa Kurbiel, the head of the? . “We aim to bring all these sustainable proposals to the investors by packaging them up, marketing them, and showing the actual impact that those investments can have in changing lives and achieving the SDGs,” she explains.?
And indeed, many inspiring on-the-ground stories are known by her. For example, the Joint SDG Fund has worked for hand in hand with the government of Fiji. A country that, like all Small Island Developing States, has been plagued by the severe impacts of natural disasters and global warming, with a significant portion of its gross domestic product (GDP) rooted in tourism because of its beautiful coral reef.?
But precisely, the coral reef has been negatively affected, and its damage affects communities that heavily rely on tourism to survive. A project funded by this initiative looked for alternatives to toxic fertilizers so organic ones can be used instead, sourced from seaweed and other materials, with no adverse consequences over fish, the ocean, and the reef itself. This has increased employment among women and youth in particular.
Governments and the United Nations at the country level lead every proposal that the Joint SDG Fund invests in. “Individuals, including faculty and students, are recently getting more interested in knowing for sure if their current investment portfolio is helping the SDGs in one way or another,” Ms. Kurbiel comments. Students, she added, have a significant influence and power, which is “to be a voice for change,” she highlights.
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