Solutions for all: Global Challenges to Achieve the SDGs
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1) The document discusses financing solutions to achieve the UN Sustainable Development Goals (SDGs) by 2030. It argues that public funding alone will not be enough and that private sector finance must play a bigger role through impact investment. 2) Business has a major opportunity to benefit from sustainable development and the SDGs by opening new markets while enhancing reputations. Developing countries represent over half of the estimated $12 trillion in business opportunities associated with achieving the SDGs. 3) Key investments needed to achieve the SDGs include human capital, infrastructure, resilience, gender equality and digital infrastructure. The World Bank aims to accelerate more and better investments in these areas to promote greater equity and economic growth.
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Solutions for all: Global Challenges to Achieve the SDGs
- 1. Solutions for all: Global Challenges to Achieve the SDGs Dr. Mahmoud Mohieldin Senior Vice President World Bank Group March 15, 2019
- 2. Contents 2 1 Finance 2 Business and Sustainable Development 3 Accelerating the SDGs
- 3. 3 1. Finance Paradigm shift - move the discussion from “billions” to “trillions” Financing will have to come from multiple sources: governments and philanthropy, remittances, South- South flows, other ODA, and FDI Two main pillars: public domestic resources and private sector finance Source: World Investment Report, UNCTAD, 2018
- 4. 4 1. Maximizing Finance for Development • The World Bank Group’s crucial effort to redefine our approach to development finance: leveraging the private sector in ways that optimize the use of scarce public resources • It is nearly impossible to meet the SDGs by relying on public funding alone • The private sector can play a much bigger role in socially and environmentally responsible development, both as an investor and as a source of innovation and expertise
- 5. 5 1. The Cascade Approach
- 6. 6 2. Evolution of Business and Sustainable Development
- 7. 7 "Business leaders need to strike out in new directions to embrace more sustainable and inclusive economic models." "Big business and finance need to regain public trust." “More than 150 million children are working unseen and unprotected.” "The Global Goals could deliver 380 million new jobs in business." “There is the chance to rebuild trust between business and wider society.” Source: Business Commission, 2017 2. Business and Sustainable Development
- 8. 8 2. SDGs Present Enormous Business Opportunity Source: CEO Guide to the Sustainable Development Goals, World Business Council For Sustainable Development (WBCSD) Source: Business Commission, 2017 Sustainable development: • Opens up new opportunities and big efficiency gains • Drives innovation • Enhances reputations With a reputation for sustainability… • Companies attract and retain employees, consumers, B2B customers and investors • Companies secure their license to operate • Companies thrive and deliver attractive returns to shareholders
- 9. 9Source: Business Commission, 2017 • Asia is particularly well placed to reap the collective benefits • More than 40% of the US$12 trillion in business opportunities associated with the SDGs around the world are in Asia * Rest of developing Asia includes Central Asia (e.g., Uzbekistan), South Asia (e.g., Bangladesh), Southeast Asia (e.g., Laos), and North Korea. 2. More than 50% of Opportunities are in Developing Countries
- 10. 10 2.WBG’s Operating Principles for Impact Investment Strategic intent 1. Define strategic impact objectives consistent with the investment strategy 2. Manage strategic impact and financial returns at portfolio level Origination & Structuring 3. Establish the investor’s contribution to the achievement of impact 4. Assess the expected impact of each investment, based on a systematic approach 5. Assess, address, monitor and manage the potential risks of negative effects of each investment Portfolio management 6. Monitor the progress of each investment in achieving impact against expectations and respond appropriately Independent verification 9. Publicly disclose alignment with the principles and provide regular independent verification of the extent of alignment Impact at exit 7. Conduct exits, considering the effect on sustained impact 8. Review, document and improve decisions and processes based on the achievement of impact and lessons learned
- 11. • Closing the gender gap could increase GDP by an average of 35% A bigger boost to growth • Increased labor force participation • Gender diversity increases productivity and potential for innovation Higher productivity • Men’s wages will also increase as a result of greater inclusion of women in the labor force since productivity will increase • Equality can add $12 trillion to global growth 11 2. Gender Equality and Sustainable Development Higher male incomes A bigger payoff Sources: IMF, 2018, McKinsey 2015
- 12. 12 3. Invest in Human Capital • The World Bank Group’s Human Capital Project is a global effort to accelerate more and better investments in people for greater equity and economic growth. • The cost of inaction on human capital development is going up. • HCP is expected to help create the political space for national leaders to prioritize transformational human capital investments.
- 13. 13 3. Human Capital Index was launched in 2018 Launched in 2018, the HCP assesses Building blocks of human capital: • Survival – Will kids born today survive to school age? • School – How much school will they complete and how much will they learn? • Health – Will kids leave school in good health and be ready for further learning and/or work?
- 14. 14 3. Invest in Resilience Ability to manage the wide range of shocks and stresses which may occur • natural • technological or • socioeconomic Examples of investments include: • Expansion of social protection coverage while giving priority to the poorest people • Strengthening of all aspects of climate and disaster resilient development, including coordinating institutions, risk identification and reduction, preparedness, financial and social protection, and resilient reconstruction
- 15. 15 3. Invest in Infrastructure 1E+11 1.5E+11 2E+11 2.5E+11 3E+11 3.5E+11 4E+11 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Infrastructure Outlook: Africa Current trends Investment need Investment need inc. SDGs 1.3E+12 1.5E+12 1.7E+12 1.9E+12 2.1E+12 2.3E+12 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Infrastructure Outlook: Asia Current trends Investment need Investment need inc. SDGs Source: Global Infrastructure Hub, 2018
- 16. 16 3. Invest in Digital Infrastructure: Three B’s of Technology Build Develop the foundational building blocks for sustainable, technology- led economies (for example, the Digital Economy for Africa Initiative, and Identification for Development). Boost Expand the capacity of people and institutions to thrive in a resilient society in the face of disruption (for example, ongoing citizen engagement). Broker Harness disruptive technology, data, and expertise to solve development challenges and manage risks through collaborations (for example, with partners including Airbnb, Amazon and LinkedIn).
- 17. Mahmoud Mohieldin Senior Vice President World Bank Group worldbank.org/sdgs Follow us on twitter @WBG2030 Mahmoud Mohieldin on March 15, 2019
Editor's Notes
- Investments of all kinds: public and private, national and global, in both capital and capacity. Public domestic resources, where the most substantial development spending happens, and private sector finance and investment, the largest potential source of additional funding.
- A comment on the private sector window: Recognizing the critical role of the private sector in achieving the SDGs, the 18th replenishment of the International Development Association (IDA) – the World Bank’s fund for the poorest – for the period 2017-2020 includes for the first time a private sector window to promote blended financing of development projects. The World Bank also partnered with BNP Paribas to launch a set of equity-index linked World Bank bonds, in which the index is based on companies selected for their SDG alignment.
- Public financing is scarce. In order to maximize the best use of public financing, the World Bank Group has begun to implement the Cascade. This means that for every project being considered for financing, WBG staff will first review all possible sources of financing in order to ensure that scarce public resources for the best uses
- How were the Principles developed? The Principles were developed by the International Finance Corporation (IFC), drawing on its own impact management practices, and consulting with a range of asset owners, asset managers, asset allocators, multilateral development banks (MDBs), and development finance institutions (DFIs), including the collaborating institutions listed in this guide. The Principles draw on emerging best practices across a range of public and private institutions that are investing for impact. These include MDBs and DFIs that have both financial and development impact objectives, and decades of experience investing for impact in emerging markets. The Principles also draw on the more recent experience of specialist impact funds and asset managers that have developed robust impact management systems. In addition, they build on industry-wide initiatives around impact management, including the Impact Management Project (IMP). How can the Principles be used, and by whom? The Principles are intended to be a reference point for investors for the design and implementation of their impact management systems. They may be implemented through different types of systems, which are designed to be fit for purpose for different types of institutions and funds. They do not prescribe specific tools and approaches, or specific impact measurement frameworks. They do not provide guidance on how they are to be implemented. The ambition is that industry participants will continue to learn from each other as they implement the Principles. Each asset owner and asset manager would align their management systems to the Principles. However, the manner in which the Principles are applied will differ by type of investor and institution. Asset owners and asset managers may apply the Principles to the relevant parts of their portfolios. For example, asset owners and their advisors may use the Principles to screen impact investment opportunities. Asset managers and their advisors may use the Principles to assure investors that impact funds are managed in a robust fashion.
- Human capital is a key driver of economic growth and development and it is critical for the private sector to scale up business in developing countries. Investing in people through nutrition, quality health care, education, jobs and skills helps develop human capital. Over the past decades, we have achieved historic human development gains, but a massive gap still remains: - Nearly a quarter of all young children are stunted, - Half of the world’s population cannot access essential health services, and - A learning crisis is holding many countries back. There is mounting evidence that without strengthening human capital, countries cannot sustain economic growth, will not have a workforce prepared for more highly skilled jobs of the future to effectively compete in the global economy.
- Human capital is a key driver of economic growth and development and it is critical for the private sector to scale up business in developing countries. Investing in people through nutrition, quality health care, education, jobs and skills helps develop human capital. Over the past decades, we have achieved historic human development gains, but a massive gap still remains: - Nearly a quarter of all young children are stunted, - Half of the world’s population cannot access essential health services, and - A learning crisis is holding many countries back. There is mounting evidence that without strengthening human capital, countries cannot sustain economic growth, will not have a workforce prepared for more highly skilled jobs of the future to effectively compete in the global economy.