6 necessary steps to make the SDGs a reality
This article is one in a series of opinion pieces written by prominent authors on issues covered in "Development Co-operation Report 2016: The Sustainable Development Goals as Business Opportunities."
Achieving the Sustainable Development Goals (SDGs) calls for concerted efforts to galvanize private sector investment in numerous SDG-linked sectors: infrastructure development, health and education, agriculture and food security, and a host of other areas of social, environmental and economic challenges.
Building an effective compact between the public and private sectors to mobilize and channel investment towards the SDGs will demand transformative action over a broad range of areas.
The United Nations Conference on Trade and Development’s (UNCTAD) action plan for private investment in the SDGs puts forward policy options in the form of focused action packages in specific segments of SDG investment, designed to promote a “big push” by the international community and national policy makers for private investment in sustainable development:
1. Establishing investment agencies specialized in creating and marketing pipelines of bankable projects in SDG sectors, bringing together specialist expertise propped up by technical assistance.
Regional investment “brokers” could help lower costs and create economies of scale. The promotion of investment in SDG sectors should be supported by an international investment policy regime that pursues the same objectives.
Currently, international investment agreements focus solely on investment protection. A new generation of nternational investment agreements should safeguard policy space for sustainable development.
2. Restructuring investment schemes to create incentives that facilitate sustainable development projects.
This could also help to mobilize finance for the SDGs. “Location-based” incentives — targeted at increasing local competitiveness — could be replaced by “SDG-based” incentives, targeted at promoting investment for sustainable development.
3. Using regional and South-South investment compacts to inject impetus into SDG investment, especially for cross-border infrastructure development and regional clusters of firms operating in SDG sectors (e.g. "green zones").
These compacts could include joint investment promotion mechanisms, programmes to build absorptive capacity and public-private partnerships.
4. Forming new types of partnerships between outward investment agencies in advanced countries and investment promotion agencies in developing countries to help to market SDG investment opportunities while facilitating joint monitoring and impact assessment.
Concrete tools to support such efforts could include online pipelines of bankable projects and databases of opportunities for business linkages in developing countries. A multilateral technical assistance consortium could be set up to support the least developed countries.
5. Enabling innovative financing mechanisms and reorienting financial markets to advance sustainability.
New and existing financing mechanisms, such as green bonds and impact investing, deserve support and an enabling environment to allow them to be scaled up and marketed to the most promising sources of capital.
Furthermore, integrated reporting — on the economic, social and environmental impact of private investment — is needed to nudge financial markets towards sustainable development requirements. This is a fundamental step towards responsible investor behaviour.
6. Establishing a curriculum for business schools worldwide to change the business mindset and raise awareness about investment needs and opportunities in low-income countries.
This curriculum should teach students the skills needed to successfully operate in developing country environments and encourage investment in, for and with the poor. Teaching materials could include relevant modules in training and certification programmes for financial market actors.
The 2030 Agenda for Sustainable Development is without doubt the most ambitious development plan yet to be embarked upon by the international community. Only by pooling global resources and ideas in a concerted manner will we ensure efforts to put the world on a more sustainable growth path.