Financing the Sustainable Development Goals (SDGs)
On the 5th of September 2015, all 193 United Nations member states universally chose to adopt the 2030 Agenda for Sustainable Development. The initiative is defined by the UN as “a comprehensive call to action to end poverty, protect the planet and improve the lives and prospects of everyone, everywhere”.
The Agenda is comprised of 17 overarching global Sustainable Development Goals (SDGs); each with specific yet intertwined areas of focus in areas such as health, water, poverty and gender equality. Within these 17 SDGs there are a further 169 targets and over 230 indicators to focus action and measure real world outcomes. These goals take a holistic approach by acknowledging that all member states have work to do across multiple sectors of society.
Many view the goals of “No Poverty” or “Zero Hunger” as overly confident. For those people, the success of the Millennium Development goals may present a valuable source of optimism. This previous agenda sought to half the global population living in poverty. During a similar 15-year timeframe the world overachieved on this initiative by going from 36% to 12% by 2015.
So, 7 years on from the launch of the Sustainable development agenda how are we doing? As we all know the last few years have taken an unpredictably tumultuous turn. The confluence of crises dominated by COVID 19, conflicts and climate change have put the 2030 goals in grave danger. Years of progress have been reversed. The pandemic wiped out more than 4 years of progress on poverty eradication and pushed 93 million more people into extreme poverty in 2020. On the other hand, child mortality rates have improved along with universal access to electricity.
To get back on track a substantial increase in both public funding and private investment. The UN estimates that the world will need to spend between 3 and 5 trillion annually to meet the Sustainable Development Goals by 2030. This is where ESG investing plays an important part in filling the funding gap.
The Principles for Responsible Investing Initiative highlight the role and opportunity presented to investors by stating “There is a continuous feedback cycle between (ESG) risks and opportunities and (SDG-aligned) outcomes: ESG issues create risks and opportunities for investors, whose actions shape outcomes on the world, which feed back into portfolios in the form of ESG risks and opportunities, and so on (Figure 2).”
After a slow start, there has been some progress by the finance industry yet currently levels still lag behind the necessary investment to reach the 2030 targets. On this issue, Ketan Patel, Chairman of force for good capital and CEO Co-Founder of Greater Pacific Capital stated “With less than ten years to go, there is a pressing need to explore even bigger radical solutions than those being deployed today”