Achieving a transformative post-2015 development agenda will require a comprehensive framework for its financing, among other means of implementation. On several occasions, UN Member States have referred to financial support as the “lifeblood” of the next development agenda. The Intergovernmental Committee of Experts on Sustainable Development Financing (ICESDF) highlighted that the needs are “huge” and the challenges in meeting them are “enormous but surmountable,” as global public and private savings would be sufficient to meet the needs.
However, the experts clearly underlined, current financing and investment patterns will not deliver sustainable development. The way in which this lifeblood of the new agenda will circulate – the vascular system of the agenda, perhaps – is, therefore, a subject of extensive discussion at the UN, and will continue to be so throughout 2015.
The third International Conference on Financing for Development (FfD), which will take place in Ethiopia in July 2015, could offer a blueprint of an effective vascular system for the post-2015 development agenda. This policy update will outline key recommendations of three inputs to the FfD process: the outcome document of the Open Working Group on the Sustainable Development Goals (OWG), the ICESDF report, and the Synthesis Report of the UN Secretary-General on the post-2015 development agenda.
A Comparison of Three Inputs
At the UN Conference on Sustainable Development (UNCSD, or Rio+20) in 2012, the international community decided to establish both an Open Working Group (OWG) to develop a set of sustainable development goals (SDGs) to be integrated into the UN development agenda beyond 2015 and the Intergovernmental Committee of Experts on Sustainable Development Financing (ICESDF), to develop options for a financing strategy to facilitate the achievement of sustainable development objectives.
The OWG concluded its work in July 2014, proposing a set of 17 SDGs accompanied by 169 targets (which will be further elaborated through indicators ). According to the OWG outcome, they constitute an “integrated, indivisible” set of global priorities for sustainable development. The 17 proposed SDGs are widely agreed to be global in nature and universally applicable, while taking into account different national realities, capacities and levels of development and respecting national policies and priorities. The 169 proposed targets are defined as aspirational global targets, with each government setting its own national targets guided by the global level of ambition but taking into account national circumstances.
Of the 169 targets proposed by the OWG, 62 are dedicated to the means of implementation (MOI) of the new agenda. Of the 62, those that are considered “cross-cutting” have been clustered under a stand-alone goal, titled “Strengthen the means of implementation and revitalize the global partnership for sustainable development” (Goal 17) – such as “promote a universal, rules-based, open, non-discriminatory and equitable multilateral, trading system under the WTO.” More sector-specific MOI are located under the relevant goal, e.g. “correcting and preventing trade restrictions and distortions in world agricultural markets”(2.b).
Shortly after the conclusion of the OWG, in August 2014, the ICESDF finalized its own report. Its approach is based on the principle of country ownership, supported by a strengthened global partnership for sustainable development. The document proposes a “basket” of policy measures, encompassing 115 policy options, regulations, institutions, programs and instruments, from which governments can choose policy combinations appropriate to their national needs and circumstances.
And on 4 December 2014, the UN Secretary-General released an advance version of his “Synthesis Report on the Post-2015 Development Agenda,” which has a section dedicated to “Mobilizing the means to implement our agenda.”
Centered on sustainable development, the three documents will serve as major inputs to the FfD Conference in July 2015. The outcome of the Conference, in turn, is expected to constitute an important contribution to and support for the implementation of the UN’s post-2015 development agenda. In this way sustainable development will be integrated into the financing for development agenda.
The OWG identified five areas of MOI: finance, technology, capacity-building, trade, and systemic issues. The reports of the ICESDF and Secretary-General provide recommendations addressing many of the same areas. How much convergence is found among the three documents, and where do their recommendations diverge? The following tables compare how the three inputs address each of these five MOI areas, to help you assess the similarities and differences of the proposals, as the negotiations on financing for (sustainable) development commence.
Each of the sources was developed with a different audience and purpose in mind, which should be considered in viewing the advice. The SDGs seek to offer short, universal goals and targets, while the ICESDF report was developed to inform UN Member States and policy makers regarding a range of options for their consideration. The Synthesis report was developed as a mid-point between the other two options, seeking to offer a starting point for negotiations that reflects the inputs coming into the debate to this point.
The SDG columns below are relatively short and contain limited details and examples. In many cases, the ICESDF and Synthesis report name multiple types of policies, multilateral structures and activities that would be involved in recommended action. The Synthesis report, for example, contains a specific reference to countries that should receive special attention, including Least Developed Countries (LDCs), Land-locked Developing Countries (LLDCs), and Small Islands Developing States (SIDS). The SDGs call for investment in infrastructure, while the Synthesis report names “critical sectors, such as sustainable energy, infrastructure and transport.” On multi-stakeholder partnerships, both the ICESDF and Synthesis reports discuss what they label as “Blended finance,” or “the development financing opportunities that pool public and private resources and expertise.” On monitoring and accountability for finance, the ICESDF and Synthesis reports are also more specific, referencing roles of supreme audit institutions and research data protocols, among others. The SDGs are the most specific on a few issues, however, such as its call for “reducing to less than 3% the transaction costs of migrant remittances and eliminating remittance corridors with costs higher than 5%.”
Different approaches to the issues are also evident, particularly in the sections on trade. The SDGs call for “promoting a universal, rules-based, open, non-discriminatory and equitable multilateral, trading system under the WTO,” while the ICESDF emphasized different attributes of the preferred trading system (“an open and dynamic world trading system and the liberalization of trade in environmental goods and services) and the Synthesis report placed the preferred action within a specific intergovernmental process: a more equitable multilateral trading system and a conclusion of the Doha round. On liberalization in trade of agricultural products, the Synthesis report is the briefest (“agricultural export subsidies should be removed”) while the other two sources offered the same, more detailed advice for the preferred actions: correcting and preventing trade restrictions and distortions in world agricultural markets including by the parallel elimination of all forms of agricultural export subsidies and all export measures with equivalent effect, in accordance with the mandate of the Doha Development Round.
The tables below offer an introduction to the ways in which these three inputs have treated MOI, and are offered here to help the reader better understand the proposals on the table as well as to consider the formulation that is fit for the purpose under negotiation.
Finance
| OWG Goal 17 |
ICESDF Report |
Synthesis Report |
| Strengthening domestic resource mobilization and supporting developing countries to improve domestic capacity for tax and other revenue collection (17.1) |
strengthening fiscal management capacity and capacity building for domestic resource mobilization, including institutional capacities to collect adequate revenues from extractive industries; mainstreaming sustainable development in the national fiscal and financial policies; aligning public spending and public procurement policies with national sustainable development strategies, inclusive of environmental, social, economic, gender, etc. goals; fiscal decentralization; providing access to financial services for households and micro-enterprises; strengthening financial capability, including financial literacy; establishing consumer protection agencies; promoting lending to small and medium-sized enterprises (SMEs); combating corruption including through the implementation of United Nations Convention against Corruption; and prevention, enforcement and stolen asset recovery |
aligning national visions, plans, annual budgets and medium-term expenditure frameworks with national sustainable development strategies; increasing access to finance for SMEs; providing universal access to financial services; expanding financial literacy; establishing strong consumer protection agencies; eliminating specific barriers to women’s access to finance; stimulating entrepreneurship |
| rationalizing inefficient fossil fuel subsidies (12.c) |
proposes rationalizing inefficient fossil fuel subsidies andinstituting carbon taxes |
notes that “harmful fossil fuel subsidies, both direct and indirect, should be phased out and fiscal and macro-economic policies must include low carbon solutions for sustainable development” |
| notes the need for developed countries to fulfill their official development assistance (ODA) commitments (17.2); encouraging ODA and financial flows, including foreign direct investment (FDI), to states where the need is greatest (10.b) |
underlines that “ODA will remain critical and should be focused where needs are greatest and the capacity to raise resources is weakest, with a sufficient portion of ODA concentrated on the eradication of extreme poverty,” and urges member states to “honor their commitments in full and in a timely manner, and neither ignore nor dilute them,” while also noting that “a significant share of new multilateral funding for climate change adaptation should flow through the Green Climate Fund, as agreed at UNFCCC COP 16.” The document specifically stresses the importance of international public finance for the financing of global public goods |
urges all developed countries to meet the 0.7% target and agree to concrete timetables to meet ODA commitments, including the Istanbul commitments to LDCs of 0.15% of GNI by 2015. The report further notes that ODA should be: better targeted; more efficient; more transparent; leveraging additional resources; focusing more on LDCs, LLDCs, SIDS, and countries in vulnerable situations; and positively impacting the poorest and most vulnerable in all societies |
| mobilizing additional financial resources for developing countries from multiple sources (1.a; 17.3) |
recommends governments to “effectively and efficiently”make use of all international public financing sources and instruments, including South-South Cooperation (SSC) – “as complement to North-South cooperation,” triangular cooperation, and loans from the International Monetary Fund (IMF), the World Bank, and other international and regional financial institutions (IFIs). Further recommendations, on international private financing, include, inter alia: channeling international funds – including foreign direct investment (FDI), portfolio flows and cross-border bank loans – towards long-term investment in sustainable development; strengthening regional economic and financial monitoring mechanisms to stabilize private capital flows at a regional level; and effectively mapping philanthropic flows |
notes the new opportunities presented by the establishment of new institutions of SSC, such as the BRICS Bank and the Asian Infrastructure Investment Bank. The document further stresses the need: to mobilize and redirect trillions of dollars of private resources to deliver on sustainable development objectives; the levels of concessionality to take into account different development stages, circumstances and multiple dimensions of poverty, and the particular type of investment made; and IFIs to consider establishing a process to examine the role, scale and functioning of multilateral and regional development finance institutions to make them more responsive to the sustainable development agenda |
| reducing to less than 3% the transaction costs of migrant remittances and eliminating remittance corridors with costs higher than 5% (10.c) |
emphasizes the importance of facilitating the flow of remittances and private development assistance, including through issuing diaspora bonds and reducing the transaction costs and barriers for remittances |
notes that “efforts should be intensified to reduce costs on the transfer of remittances” |
| increasing investment in infrastructure (2.a) |
specifically stresses the importance of international public finance for national development such as infrastructure and calls for domestic investments in “infrastructure, essential public services, and human capital” to create an enabling environment for private investment |
emphasizes that long-term investments, including FDI, are needed in critical sectors, such as sustainable energy, infrastructure and transport |
| assisting developing countries in attaining long-term debt sustainability (17.4) |
underlines the need for “strengthening the means for cooperatively resolving sovereign debt difficulties” and recommends, inter alia, using the technical assistance provided by international institutions to strengthen local capacities to effectively manage public debt, offering at the same time a complex basket of proposed instruments (section on “Global governance for financing for sustainable development”) |
stresses the need to enhance international efforts to strengthen arrangements for transparent, orderly and participatory sovereign debt restructuring, proposing as an immediate step bringing together relevant authorities and other stakeholders to develop an informal forum on sovereign debt, while continuing ongoing discussions |
Capacity building
| OWG Goal 17 |
ICESDF Report |
Synthesis Report |
| underlines the need to enhance international support for capacity building in developing countries to support national plans to implement all SDGs (17.9), and specifically in the areas of: health (3.c, 3.d); education (4.b, 4.c); water and sanitation (6.a, 6.b); biodiversity (15.c); and peace and security (16.a) |
recommends, inter alia: building institutions and infrastructure – including supervision, clearing and settlement systems – to develop local and regional capital markets; establishing national development banks (NDBs); creating facilitative platforms to encourage coordination among international funds and initiatives; creating joint platforms for investor groups (e.g. for sustainable infrastructure investments); and capitalizing on international support for capacity development on the preparation of ‘bankable projects’ |
stresses that developing countries will need support for capacity building. LDCs and post-conflict countries will have particularly urgent needs |
Trade
| OWG Goal 17 |
ICESDF Report |
Synthesis Report |
| promoting a universal, rules-based, open, non-discriminatory and equitable multilateral, trading system under the WTO (17.10) |
specifically calls for, inter alia, an open and dynamic world trading system and the liberalization of trade in environmental goods and services |
underscores the need for a more equitable multilateral trading system and a conclusion of the Doha round |
| increasing significantly the exports of developing countries (17.11); implementing the principle of special and differential treatment for developing countries, in accordance with WTO agreements (10.a) |
stresses the importance of the implementation of duty-free, quota-free market access for all LDCs |
|
| increasing Aid for Trade support for developing countries (8.a) |
specifically stresses the need for assisting developing countries through “aid for trade” |
|
| correcting and preventing trade restrictions and distortions in world agricultural markets including by the parallel elimination of all forms of agricultural export subsidies and all export measures with equivalent effect, in accordance with the mandate of the Doha Development Round (2.b.) |
calls for “correcting and preventing trade restrictions and distortions in world agricultural markets, including by the parallel elimination of all forms of agricultural export subsidies and all export measures with equivalent effect, in accordance with the mandate of the Doha Development Round” |
notes that “agricultural export subsidies should be removed” |
| other trade-related MOI include: facilitating timely access to market information, including on food reserves, in order to help limit extreme food price volatility (2.c.); providing access of small-scale artisanal fishers to marine resources and markets (14.b); and “provide access to affordable essential medicines and vaccines, in accordance with the Doha Declaration, which affirms the right of developing countries to use to the full the provisions in the TRIPS agreement regarding flexibilities to protect public health and, in particular, provide access to medicines for all” |
|
highlights the need for better access to medicines |
Systemic issues
| OWG Goal 17 |
ICESDF Report |
Synthesis Report |
| Policy-related issues on finance |
Policy-related issues on finance |
Policy-related issues on finance |
| enhancing global macroeconomic stability through policy coordination and policy coherence (17.13) and enhancing policy coherence for sustainable development (17.14) |
recommends enhancing international coordination of monetary policies of the major economies and management of global liquidity; completing the ongoing reform processes of development banks and the IMF; strengthening the integration and harmonization of existing international mechanisms, frameworks and instruments, including through the UN System Chief Executives Board, while avoiding the proliferation of new support vehicles; deepening international cooperation on taxes and illicit flows; strengthening regional cooperation; and reducing the fragmentation and complexity of environmental and climate finance |
notes the need for: a more fair representation of emerging and developing countries in international financial and economic decision-making; better regulation in the international financial and monetary systems; strengthening international coordination of macroeconomic policies of major economies and the management of global liquidity; considering more systematic issuance of Special Drawing Rights (SDRs) for continued assistance and countercyclical macroeconomic management; ensuring investment policies that are in line with the UN’s Guiding Principles on Business and Human Rights, core labor standards of the ILO, and United Nations environmental standards; and countries to adopt national sustainable development financing strategies that review and strengthen the domestic policy, the legal and institutional environment and the policy coherence for sustainable development |
| create sound policy frameworks, at national, regional and international levels (1.b), and specifically in the areas of gender equality (5.a), employment (8.b), industrialization (9.b), and human settlements (11.b) |
suggests promoting policies to: create sound regulatory frameworks to develop local capital markets and financial systems for long-term investment; promoting the rule of law, human rights and effective security; promote full and productive employment; ensuring universal provision of basic social services; strengthening “social protection floors;” change investment patterns – direct emission restrictions on investments, tax incentives, energy efficiency or renewable energy targets, payments for ecosystem services, etc.; and include microfinance in national regulatory frameworks |
stresses the need for environmentally and socially sound policies; promoting human rights, strong institutions and the rule of law; and ensuring a social protection floor |
| multi-stakeholder partnerships |
multi-stakeholder partnerships |
multi-stakeholder partnerships |
| enhancing the global partnership for sustainable development complemented by multi-stakeholder partnerships (17.6) and encouraging and promoting effective public, public-private, and civil society partnerships (17.7) |
has a section dedicated to “Blended finance,” defined as the development financing opportunities that pool public and private resources and expertise, which encompass structured public-private funds and innovative ‘implementing partnerships’ between a wide range of stakeholders – governments, civil society, philanthropic institutions, development banks and private for-profit institutions. The experts recommend governments to take a portfolio approach for pooling funds for multiple projects and to carefully plan, design and manage workable structures that share the risks and rewards fairly. They underline the role that ODA and other forms of assistance can play in capacity building of developing countries in this regard. The ICESDF report offers a toolkit of potential blended finance instruments |
notes that blended financing platforms could have a great potential, but they need to ensure fair returns to the public, while incorporating social, environmental, labour, human rights, and gender equality considerations. He adds that the risk should be managed through diversification and the use of multiple simultaneous projects, allowing for gains in some projects to offset losses in others |
| monitoring and accountability on finance |
monitoring and accountability on finance |
monitoring and accountability on finance |
| enhance capacity building support to developing countries to increase the availability of high-quality, timely and reliable data disaggregated by income, gender, age, race, ethnicity, migratory status, disability, geographic location and other characteristics relevant in national contexts (17.8) |
specifically highlights the need for strengthening national statistical capabilities, strengthening supreme audit institutions, and establishing a research data protocol |
that national oversight mechanisms such as supreme audit institutions and oversight functions by legislature should be strengthened |
| build on existing initiatives to develop measurements of progress on sustainable development (17.9) |
underlines the need for: a monitoring frameworks for the post-2015 development agenda that keeps track of sustainable development financing flows from all sources, with transparent and separate reporting for development and climate finance commitments; promote environmental accounting; strengthen economic, environmental, social and governance (EESG) reporting; strengthening national and independent audit and evaluation agencies to complement financial auditing with monitoring and evaluation of economic, social and environmental impacts; harmonizing and increasing integration of monitoring and accounting frameworks to consider all financing sources and their interplay at the country level; and strengthening mutual accountability in the relationship between an ODA-receiving country and its donors |
notes that all countries should require companies to undertake mandatory Economic Environment Social and Governance (EESG) reporting, accompanied with regulatory changes that ensure that investor incentives are aligned with sustainable development goals |
Next Steps towards Financing for (Sustainable) Development in the Post 2015 Era
The Synthesis Report of the Secretary-General calls on governments to better align the financing frameworks that developed out of two major strands of development debate – the Monterrey (financing for development) and the Rio (sustainable development) processes. At the same time, Member States are currently working on two separate tracks of negotiations: in January 2015, governments are expected to start both the intergovernmental negotiations on the post-2015 development agenda and the drafting process of the outcome document of the third FfD Conference.
Through these two processes, governments have the opportunity to ensure coherence going forward.
Will the third International Conference on Financing for Development end up being the (first) international Conference on Financing for Sustainable Development – as one delegate framed it in the latest substantive session of its preparatory process?
We will be tracking the discussions, to help you follow the evolving debate and its outcome, including the ways in which parties draw on and incorporate the inputs from the SDGs, ICESDF and Synthesis reports.