Investment in the SDGs: An action plan for promoting private sector contributions
Faced with common global economic, social and environmental challenges, the international community is defining a set of Sustainable Development Goals (SDGs). The SDGs, which are being formulated by the United Nations together with the widest possible range of stakeholders, are intended to galvanize action worldwide through concrete targets for the 2015-2030 period for poverty reduction, food security, human health and education, climate change mitigation, and a range of other objectives across the economic, social and environmental pillars.
The role of the public sector is fundamental and pivotal, while the private sector contribution is indispensable. The latter can take two main forms, good governance in business practices and investment in sustainable development. Policy coherence is essential in promoting the private sector’s contribution to the SDGs.
The SDGs will have very significant resource implications across the developed and developing world. Global investment needs are in the order of $5 trillion to $7 trillion per year. Estimates for investment needs in developing countries alone range from $3.3 trillion to $4.5 trillion per year, mainly for basic infrastructure climate change mitigation and adaptation, health, and education.
The SDGs will require a step-change in the levels of both public and private investment in all countries. At current levels of investment in SDG-relevant sectors, developing countries alone face an annual gap of $2.5 trillion. In developing countries, especially in LDCs and other vulnerable economics, public finances are central to investment in SDGs. However, they cannot meet all SDG-implied resource demands. The role of private sector investment will be indispensable.
Today, the participation of the private sector in investment in SDG-related sectors is relatively low. Only a fraction of the worldwide invested assets of banks, pension funds, insurers, foundations and endowments, as well as transnational corporations, is in SDG sectors. Their participation is even lower in developing countries, particularly the poorest ones.
In LDCs, a doubling of the growth rate of private investment would be a desirable target. Developing countries as a group could see the private sector cover approximately the part of SDG investment needs corresponding to its current share in investment in SDG sectors, based on current growth rates. In that scenario, however, they would still face an annual gap of about $1.6 trillion. In LDLs, where investment needs are most acute and where financing capacity is lowest, about twice the current growth rate of private investment is needed to give it a meaningful complementary financing role next to public investment and overseas development assistances (ODA).
Increasing the involvement of private investors in SDG-related sectors, many of which are sensitive or of a public service nature, leads to policy dilemmas. Policymakers need to find the right balance between creating a climate conducive to investment and removing barriers to investment on the one hand, and protecting public interests through regulation on the other. They need to find mechanisms to provide sufficiently attractive returns to private investors while guaranteeing accessibility and affordability of services for all. And the push for more private investment must be complementary to the parallel push for more public investment.
UNCTAD’s proposed Strategic Framework for Private investment in the SDGs addresses key policy challenges and options related to (i) guiding principles and global leadership to galvanize action for private investment, (ii) the mobilization of funds for investment in sustainable development, (iii) the channeling of funds into investments in SDG sectors, and (iv) maximizing the sustainable development impact of private investment while minimizing risks or drawbacks involved.
Increasing private investment in SDGs will require leadership at the global level, as well as from national policymakers, to provide guiding principles to deal with policy dilemmas: to set targets, recognizing the need to make a special effort for LDCs: to ensure policy coherence at national and global levels; to galvanize dialogue and action, including through appropriate multi-stakeholder platforms; and to guarantee inclusiveness, providing support to countries that otherwise might continue to be largely ignored by private investors.
Challenges to mobilizing funds in financial markets include start-up and scaling problems for innovative financing solution, market failure, a lack of transparency on environmental, social and corporate governance performance, and misaligned rewards for market participants. Key constraints to channeling funds into SDG sectors include entry barriers, inadequate risk-return ratios for SDG investment, a lack of information and effective packaging and promotion of projects, and a lack of investor expertise. Key challenges in managing the impact of private investment in SDG sectors include the weak absorptive capacity in some developing countries, social and environmental impact, and the need for stakeholder engagement and effective impact monitoring.
Investment in the SDGs: An action plan for promoting private sector contributions
Faced with common global economic, social and environmental challenges, the international community is defining a set of Sustainable Development Goals (SDGs). The SDGs, which are being formulated by the United Nations together with the widest possible range of stakeholders, are intended to galvanize action worldwide through concrete targets for the 2015-2030 period for poverty reduction, food security, human health and education, climate change mitigation, and a range of other objectives across the economic, social and environmental pillars.
The role of the public sector is fundamental and pivotal, while the private sector contribution is indispensable. The latter can take two main forms, good governance in business practices and investment in sustainable development. Policy coherence is essential in promoting the private sector’s contribution to the SDGs.
The SDGs will have very significant resource implications across the developed and developing world. Global investment needs are in the order of $5 trillion to $7 trillion per year. Estimates for investment needs in developing countries alone range from $3.3 trillion to $4.5 trillion per year, mainly for basic infrastructure climate change mitigation and adaptation, health, and education.
The SDGs will require a step-change in the levels of both public and private investment in all countries. At current levels of investment in SDG-relevant sectors, developing countries alone face an annual gap of $2.5 trillion. In developing countries, especially in LDCs and other vulnerable economics, public finances are central to investment in SDGs. However, they cannot meet all SDG-implied resource demands. The role of private sector investment will be indispensable.
Today, the participation of the private sector in investment in SDG-related sectors is relatively low. Only a fraction of the worldwide invested assets of banks, pension funds, insurers, foundations and endowments, as well as transnational corporations, is in SDG sectors. Their participation is even lower in developing countries, particularly the poorest ones.
In LDCs, a doubling of the growth rate of private investment would be a desirable target. Developing countries as a group could see the private sector cover approximately the part of SDG investment needs corresponding to its current share in investment in SDG sectors, based on current growth rates. In that scenario, however, they would still face an annual gap of about $1.6 trillion. In LDLs, where investment needs are most acute and where financing capacity is lowest, about twice the current growth rate of private investment is needed to give it a meaningful complementary financing role next to public investment and overseas development assistances (ODA).
Increasing the involvement of private investors in SDG-related sectors, many of which are sensitive or of a public service nature, leads to policy dilemmas. Policymakers need to find the right balance between creating a climate conducive to investment and removing barriers to investment on the one hand, and protecting public interests through regulation on the other. They need to find mechanisms to provide sufficiently attractive returns to private investors while guaranteeing accessibility and affordability of services for all. And the push for more private investment must be complementary to the parallel push for more public investment.
UNCTAD’s proposed Strategic Framework for Private investment in the SDGs addresses key policy challenges and options related to (i) guiding principles and global leadership to galvanize action for private investment, (ii) the mobilization of funds for investment in sustainable development, (iii) the channeling of funds into investments in SDG sectors, and (iv) maximizing the sustainable development impact of private investment while minimizing risks or drawbacks involved.
Increasing private investment in SDGs will require leadership at the global level, as well as from national policymakers, to provide guiding principles to deal with policy dilemmas: to set targets, recognizing the need to make a special effort for LDCs: to ensure policy coherence at national and global levels; to galvanize dialogue and action, including through appropriate multi-stakeholder platforms; and to guarantee inclusiveness, providing support to countries that otherwise might continue to be largely ignored by private investors.
Challenges to mobilizing funds in financial markets include start-up and scaling problems for innovative financing solution, market failure, a lack of transparency on environmental, social and corporate governance performance, and misaligned rewards for market participants. Key constraints to channeling funds into SDG sectors include entry barriers, inadequate risk-return ratios for SDG investment, a lack of information and effective packaging and promotion of projects, and a lack of investor expertise. Key challenges in managing the impact of private investment in SDG sectors include the weak absorptive capacity in some developing countries, social and environmental impact, and the need for stakeholder engagement and effective impact monitoring.
การแปล กรุณารอสักครู่..
