UNEP Focus on Redesigning Finance, Alignment of Financial Systems for Sustainable Development
Over 30 heads of state and government, more than 110 government ministers and over 1000 business and civil society representatives gathered in Addis Ababa for the opening of the Third International Conference on Financing for Development with calls to ensure the necessary resources to improve people’s lives while protecting the planet. The meeting takes place at a critical moment in what the United Nations has dubbed “a year for global action”.
The main objective of the conference is securing the resources for financing the Post-2015 Development Agenda to be agreed in New York in September and the global climate action to be defined at the Climate Change Conference in Paris (COP 21) in December. Together, these three summits will define the course of international development and cooperation through 2030, with the ultimate goal of eradicating poverty and limiting climate change to the internationally agreed barrier of 2°C.
“You have recognized that in a world in which both the global population and resource constraints are growing, development finance needs a reboot,” Secretary-General Ban Ki-moon told the opening in Addis Ababa.
“But without resources, commitments will amount to little more than promises on paper,” Mr. Ban noted, adding that the outcome of the conference – to be known as the Addis Ababa Action Agenda – will be the starting point of a new path for financing sustainable development.
The draft outcome document, which is still under negotiation, presents an “ambitious financing framework” that includes concrete policy commitments in at least six crucial areas, beginning with a new social compact for quality investment.
It also includes a package for least developed countries, including a commitment to increase official development assistance, as well as a new Technology Facilitation Mechanism that aims to break new ground to help facilitate the development, transfer and dissemination of relevant technologies for the sustainable development goals.
The draft calls for greater international cooperation in tax matters to stem the tide of illicit financial flows; mainstreams gender equality throughout the financing for development agenda; and makes clear that everyone’s actions need to be underpinned by a strong commitment to protect and preserve the planet.
Hailemariam Desalegn, Prime Minister of Ethiopia and President of the Conference, which is being held at the headquarters of the UN Economic Commission for Africa, noted that there are those who say that the sustainable development agenda is too ambitious. He cited six areas that are crucial: generating increased domestic resources; international public finance; the need for countries to access long-term financing for infrastructure at concessional or affordable rates; finding ways of increasing the private sector’s participation and contribution to the implementation of the new agenda; addressing the enabling domestic and international environment for development; and effective follow-up to track progress.
“Through a renewed global partnership, solidarity and collective action, we can and will mobilize the resources to achieve a prosperous and sustainable future for all, ” he said.
Of the nearly 200 side events at the conference UNEP will be hosting a side event on sustainable finance and on science and technology, along with a roundtable, on ensuring policy coherence and an enabling environment at all levels for sustainable development.
The panel on global finance will be led by UNEP’s Inquiry into the Design of a Sustainable Financial System. Launched in 2014, the Inquiry explores ways to better align the US$ 300+ trillion global financial system with its core purpose of delivering investment into the real economy, creating the conditions for sustainable development and a low-carbon transition.
In a marked break with the past, the initial findings of the Inquiry, conducted in 15 countries so far, highlight the leading role played by developing nations in this crucial reshaping of the world’s financial systems, notably those with major economies and rapidly developing financial and capital markets, for example:
• Brazil’s Central Bank has established environmental risk management requirements for banks, and is working with market actors in establishing how environmental lender liability might improve both environmental outcomes to Brazil and financial returns to banks;
• China’s People’s Bank of China has established a green finance task force, co-convened with the UNEP Inquiry, and has collaborated with dozens of public agencies and market actors to develop 14 sets of proposals for enhancing green financing through policy, regulatory and market innovations;
• Indonesia’s Financial Services Authority (OJK) has delivered the world’s first ten year roadmap for sustainable finance;
• South Africa’s stock exchange has led globally in requiring listed companies to report on their sustainability performance and the country’s pension fund legislation has led the way in requiring pension fund trustees to take sustainability factors into account while making investment decisions on behalf of intended beneficiaries.
• Kenya has the world’s highest penetration of bankless payment transactions, which has allowed it to achieve the most rapid increase of financial inclusion ever recorded, globally.
The side event will focus on upscaling these and other financial innovations to shift the trillions needed for sustainable development globally.
In addition to financing itself, the Addis Ababa conference will explore other critical issues, such as knowledge and technology transfer and policy coherence in implementing the Post-2015 development agenda.
A side event on the role of science and technology innovation in achieving sustainable development will be organized by the Inter-Agency Working Group on a Global Technology Facilitation Mechanism, co-headed by UNEP. It will explore concrete initiatives that could facilitate technology cooperation, information and knowledge sharing on technological advances crucial to sustainable development.
A Round Table on policy coherence, with input from UNEP, will focus on applying the Sustainable Development Goals (SDGs) as an integrated package of policies, to avoid potential trade-offs and redundant allocation of resources.
A report released last week by the UNEP-hosted International Resource Panel assesses the interlinkages, synergies and trade-offs among natural resource-related SDGs that decision-makers must take into account in formulating policies for their implementation.
It recommends that progress be made on all SDGs together, as an integrated, coordinated package, understanding the different goals, their resource requirements, managing the synergies and mitigating the trade-offs.
The Addis Ababa conference will last until 16 July and is expected to adopt an intergovernmentally negotiated and agreed outcome document “Addis Ababa Action Agenda” for the implementation of the new sustainable development agenda.