23 October 2018
SDG Knowledge Weekly: Finance Continued, and Private Sector Actions
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The Center for Global Development examines the contribution of the International Development Finance Club to the SDGs, while the IFC has developed nine draft Operating Principles for Impact Management.

A report from Datamaran outlines how environmental, social and governance related risks can impact businesses, and analyzes the regulatory landscape for ESG investments.

The World Business Council for Sustainable Development launched ‘The Good Life Goals,’ linking sustainable lifestyles to the SDGs.

Building on the previous edition of the SDG Knowledge Weekly, which focused on the recent annual meetings of the World Bank and IMF, this week continues the discussion on financing sustainable development, bringing in private actors that are embracing new practices to support SDG implementation. We also highlight recent events that demonstrate how businesses can take action.

The Center for Global Development (CGD) published a brief titled, ‘Rising to the SDG Challenge: The unique contribution of the International Development Finance Club’ (IDFC). Noting “significant misalignment between the structure of” multilateral development banks (MDBs) and the SDGs’ financing needs, the paper argues that institutions with stronger country-level ties to non-sovereign actors are better-suited to facilitate progress on the SDGs. It highlights that the IDFC, with an aggregate US$3.7 trillion in assets, is “uniquely positioned” to play a leadership role in this regard, especially given that the Club’s 22 member institutions are located or primarily operate in developing economies. The paper emphasizes elements of a broader SDG agenda for IDFC members, including collaborative annual reporting, open dialogue on standard setting, project collaboration and learning from investments in fragile settings, among others.

The International Finance Corporation (IFC) developed nine draft Operating Principles for Impact Management. The principles focus on elements of: strategic intent, origination and structuring of investments, portfolio management, impact at exit and independent verification. IFC notes that the principles are not intended to be prescriptive, but rather, serve as a reference point for investors in the design and implementation of their own impact management systems, tools or approaches. A write-up of the release is available on Devex.

On environmental, social and governance (ESG) investment, a report from Datamaran examines how ESG-related risks can impact businesses. Noting that, “since 2013, there has been a 72% increase of the number of recorded regulations concerning non-financial issues” the paper, titled, ‘Global Insights Report 2018: The rise of ESG regulations’ examines the landscape of 439 regulations across the utilities, healthcare and pharmaceuticals, and financial services sectors. Datamaran’s analysis finds that although ESG regulations are evolving, with social and environmental topics becoming more prominent, voluntary initiatives also have influence, and that regional and local legislators are the most active.

The World Business Council for Sustainable Development (WBCSD) launched ‘The Good Life Goals’ in collaboration with Futerra and the UN 10-Year Framework of Programmes (10YFP) on Sustainable Consumption and Production (SCP). The Good Life Goals not only link individuals’ actions to the SDGs, but also provide companies with insights as to how the SDGs can facilitate consumer engagement in an environmentally sustainable way. A more detailed write-up is available on the SDG Knowledge Hub.

A number of events have sought to connect the business world to sustainability finance, climate and other SDG-relevant topics. The IFC hosted its 5th Annual Climate Business Forum from 16-17 October in Vienna, Austria. The Forum covered energy, cities, sustainable investing, climate finance and the role of green banking, among other topics.

The 7th Responsible Business Forum on Sustainable Development, held from 11-12 October in Singapore, addressed climate action, urbanization, circular economy, human rights, and food and nutrition in the context of “partnerships for SDG action,” according to a press release. Interviewing attendees in the margins of the Forum, Hannah Koh asks on Eco-Business whether green finance in Asia is generating “false momentum or real impact.” Summarizing panelists’ remarks on innovative financing for the SDGs, Koh notes that: investors must be matched to the right projects at the right stage; NGOs can help bring in partners from a range of sectors; financiers are “driven by fear and greed” which can be leveraged, particularly when talking about climate risk.

Tangible successes exist, largely driven by government targets, particularly on transitioning to renewable energy sources.

Sustainable supply chains are crucial to businesses’ efforts on climate action. A post on Ethical Corporation outlines six takeaways from the 13th Responsible Supply Chain Summit Europe, held from 10-11 October in London, UK on the theme, ‘deliver a future-fit supply chain: drive cost savings, reduce climate impacts and minimize social risks.’ It notes that there is “widespread distrust of businesses and their motives,” which can stand in the way of building coalitions. However, tangible examples of success—largely driven by government targets—do exist, particularly on the transition to sourcing renewable energy, in part due to initiatives such as RE100. The Summit also discussed supply chain audits and changing relationships between suppliers and customers as opportunities for engagement, and delivery of value on, environmental and social issues.

A second post on Ethical Corporation describes ten takeaways from the 12th Sustainability Reporting and Communications Summit, which also took place from 10-11 October in London, UK. Central to the discussion was alignment with international frameworks, particularly the SDGs and the recommendations of the Task Force on Climate-related Financial Disclosure (TFCD). While the existence of multiple reporting frameworks may be seen as a burden by some companies, International Integrated Reporting Council (IIRC) CEO Richard Howitt noted that the Council has been working with other standards and reporting agencies such as GRI and CDP to align their systems, which renders the excuse of too many frameworks irrelevant.

A GreenBiz article by Will Sarni, Water Foundry, and Alexis Morgan, World Wildlife Fund (WWF), ties together many of the above themes and topics through the lens of water. Highlighting takeaways from World Water Week, Sarni and Morgan emphasize that: private sector organizations are critical partners in delivering the SDGs; pre-competitive, multi-stakeholder platforms are key; companies are seeing the value of and need for quantifying risk and value, and that there is a narrative to be articulated around this; and that the financial system is beginning to align with sustainability, particularly green infrastructure.

Additional issues of the SDG Knowledge Weekly can be found here.

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