4 April 2019: Launching the 2019 Financing for Sustainable Development report of the UN’s Inter-agency Task Force on Financing for Development (IATF), UN Deputy Secretary-General Amina Mohammed emphasized its “sobering message,” which points to low wage growth, rising inequality, debt distress and stagnating aid levels. In addition, she said, world economic growth seems stuck at 3%, many people have lost their faith in the multilateral system, due to inequality, and seven times more dollars’ worth of goods are subject to trade restrictions compared to a year ago.

The report, summarized in this SDG Knowledge Hub story, was launched at a press conference on 4 April 2019, at UN Headquarters in New York, US. The publication reflects that it is becoming increasingly difficult to create conditions for financing sustainable development, even though the IATF found that interest in sustainable investment is growing in the finance community, with 75% of individual investors showing interest in how their financial behavior affects the world. The causes of the increased difficulties in financing sustainable development include rapid changes in technology, geopolitics and climate change, as well as the inability of national and multilateral institutions to adapt to these changes.

Longer-term credit ratings, aligned with the SDGs, could create incentives to address financing challenges.

The Deputy Secretary-General said that incentives aligned with the SDGs can address these challenges, such as: encouraging longer-term credit ratings; carbon taxes; and “meaningful” disclosure on the social and environmental costs of doing business. She stressed the need to remake the global financial architecture, explaining that many countries face debt challenges because new instruments, and non-traditional creditors have created gaps in the current systems. As reforms to debt reduction are discussed, she said, they should consider whether debt restructuring or reduction programs can be tied to future social sector spending that less debt could unlock. Furthermore, an increase of digitalization has raised the need for changes to the global tax system to address inequities.

Mohammed noted that the UN can play a role in “connecting the dots” to better facilitate the direction of flows, adding that the institution is currently working on becoming more “fit for purpose.”

In addition to the recommendations highlighted by the UN Deputy Secretary-General, the report contains a number of other recommendations for creating a more sustainable global economy and financial system, including: a shift to long-term investment, and an inclusion of sustainability as a central risk factor; a revamp of the multilateral trading system; and addressing the concentration of markets into the hands of a small number of powerful companies, which are not limited by national borders. The publication finds that regulatory attention will need to shift to financial activities and their underlying risks, no matter the entity that engages in them, rather than by institutional type.

In a statement on the report launch, Liu Zhenmin, Under-Secretary-General for Economic and Social Affairs and IATF Chair, mentioned “a major opportunity” to overcome bottlenecks in sustainable financing in 2019, but highlighted that “the responsibility rests with governments to recommit to multilateralism.”

The IATF’s report comprises the substantive basis for discussion at the UN Economic and Social Council’s (ECOSOC) annual Forum on Financing for Development Follow-up (FfD Forum). This year’s FfD Forum will take place from 15-18 April 2019, in New York, US. [UN Press Release] [UNDP Press Release][Devex Article] [SDG Knowledge Hub Story on Report] [Publication: 2019 Financing for Sustainable Development Report]