A brief overview of finance for development, to encourage business enterprises to seek opportunity in the new global Sustainable Development Goals (SDGs)

1. There’s Money to be Made
in Sustainability
A brief overview of finance for development, to encourage business enterprises
to seek opportunity in the new global Sustainable Development Goals (SDGs)
Prepared by Juliet Downes (Barbados) December 2015

2. Changing the world in 17 steps – what are the Sustainable Development Goals (SDGs)?
https://sustainabledevelopment.un.org/sdgs

3. Why do the Sustainable Development Goals (SDGs) matter for business?
The Sustainable Development Goals (SDGs) define global sustainable development priorities and
aspirations for 2030 and seek to mobilise global efforts around a common set of goals and targets.
These goals set out the complexity of improved and sustainable development in all its
characteristics. The SDGs call for worldwide action among governments, business and civil society to
end poverty and create a life of dignity and opportunity for all, within the boundaries of the planet.
The SDGs present an opportunity for business-led solutions and technologies to be developed and
implemented, to address the world’s biggest sustainable development challenges.
Lorde Michael Hastings explains the need for SDGs and the inherent opportunities (Youtube.com)

4. Global sustainable development challenges already represent market opportunities for those
companies able to develop and deliver innovative and effective solutions, including:
 Innovative technologies to increase energy efficiency, renewable energy, energy storage,
‘green buildings’ and sustainable transportation;
 The substitution of traditionally manufactured and processed products by Information
Communications Technology (ICT) and other technology solutions that reduce emissions
and waste;
 Meeting the needs of the large and mostly untapped market for products and services –
including in healthcare, education, energy, finance and ICT – that can improve the lives of
the four billion people who currently live in low income environments.
Around the world, consumers are increasingly basing their purchasing decisions on their
perception of a company’s sustainability performance, and the promotion of SDGs will further
strengthen this trend.
Identifying future business opportunities

5. Where would the money come from to jump start initiatives?
– the Role of Institutional Investors
What would attract institutional investors to invest in emerging economies?
Investors are looking to diversify their portfolios and spread their risk. Investments in
emerging markets promise high returns.
Institutional investors look for the following:
• Transparent economy and well established rule of law
• Better and improving economic and political institutions
• Welcoming investment climate
• Government’s commitment to development

6. Well-managed public finance benefits the economy and society via macroeconomic stability and
incentives to invest, that stimulate growth. Public finance generated billions of dollars in 2013,
primarily through taxes and efficient expenditure.
Measures to mobilise public funds are imperative in securing finance for development. They
include:
 Efficient public sector administration
- Low debt to GDP ratio
- Inflation in low single digits
- Tight fiscal deficit 1 – 1.5 % of GDP
- Good governance
 Simplified and transparent tax system with facilitation of easy payments
 Countering tax avoidance, evasion, and illicit financial flows
 Proper allocation of tax dollars to public services and development needs
Mobilising domestic resources – the Role of Government
Costa Rica Public Expenditure Review
El Salvador Tax Reform case study

7. Improving the investment climate – the Role of Government
Governments play a critical role in providing a conducive investment climate through
supportive governance structures, competition policy, hard and soft infrastructure, and
instruments that foster healthy, commercially sustainable markets. These include:
 Regulatory framework that supports open competition and well functioning labour
markets
 Structures for entrepreneurship and innovation
 Financial incentive regimes e.g. project bonds, green bonds
 Transferability of capitol
 Development of a local capitol market
 Mitigating risks in a way to allow private sector to participate
 Develop Public-Private-Partnerships to facilitate public projects and share returns
Mobilizing Private Investment for Post-2015 Sustainable Development
Innovative Development Financing

8. Countries can’t do it alone - Role of Multilateral Development Banks (MDBs)
With the success of attaining the Millennium goals (2000 – 2015) to spur growth in developing
countries, the MDB’s are redoubling their efforts to strategically unlock, leverage, and catalyse private
flows and domestic resources. This is being achieved in a number of ways:
• Financial support – capacity building and improving the efficiency of the public sector
• Technical assistance and policy support - e.g. advice on tax systems and spending, increasing the
dollars coming in and the impact of each dollar being spent
• Act as a catalyst to mobilise financing from the private sector - e.g. in infrastructure, energy security
and efficiency, access to finance
• Development of local currency in capital markets
• Preparation of better projects to attract private investment with innovative returns
• Risk mitigation - pooling of risks and providing guarantees
• Monitoring and evaluation of development impact
• Fueling the growth of SMEs
From Billions to Trillions: Transforming Development Finance

9. The interplay of international, public, private, and domestic finance,
sets the environment for funds to support sustainable development.
Here are some examples of development financial aid supporting
business participation in sustainability throughout the world:
• Credit Guarantee Scheme for Businesses (Barbados)
• Energy Smart Commercial Building Retrofit Program (Canada)
• Women entrepreneurship networks and grant funding (Lebanon)
• Environmental grants and loans for small businesses (USA)
• Rural Community Development fund (South Africa)
• Green grants and funding (UK)
Sustainable Financial Programmes for Businesses

10. Ways in which businesses are using sustainability to increase competitiveness
Whether your business is an
international enterprise, small to
medium size affair or you are an
entrepreneur looking to start a
new venture, identifying and
implementing value for money
initiatives to deliver a more
sustainable business, is the key to
competitiveness in the current
business climate.
This is highlighted in this 2011
McKinsey Global survey of 2,956
companies, which reflects the
types of sustainable initiatives
being undertaken and the impact
on competitiveness.
http://www.mckinsey.com/insights/energy_resources_materials/the_business_of_sustainability_mckinsey_global_survey_results

11. Business leaders in sustainability - The case of IKEA
IKEA identified that by the year 2030, the current
poverty alleviation efforts will grow the middle
class from 2 billion people to 5 billion people, all
demanding easy, attractive, sustainable and
affordable products.
So they hired a sustainability expert and weaved
sustainability into the heart of their business
model.
They went to work with setting targets to offer
100% sustainable products only, working with
their supply chain to reduce cost - for example,
helping farmers to reduce costs and increase
yields by removing harmful pesticides, and
employing sustainable farming techniques.
Other companies on the same path are Google,
Lego, Nike and Timberland.
Steve Howard IKEA’s sustainability expert – Let’s go all the way on selling
sustainability - Ted Talks (Youtube)

12. Get Started – the demand is growing
Choose to lead on the issues that really count – don’t hold back!
 Look at your operations, where can you employ information technology /green technologies to
improve efficiency and increase cost savings. Take advantage of government incentives for
improvements.
 How can your business fulfill a need presented by one of the SDGs and the demands of a growing
population, e.g. products /services in technology, energy, health, education, agriculture, legal.
 Investigate available funding in your business environment to produce sustainable products e.g.
grants and guaranteed loans backed by development banks.
 Take advantage of social platforms to educate clients on your sustainability initiatives.
 Encourage staff to become ambassadors of sustainability.
 Invest returns in new financial instruments supporting SDGs e.g. Green Bonds