30 July 2018
SDG Knowledge Weekly: Private Sector Engagement, Public Finance and the G20
story highlights

Businesses and association launched papers on investment, human rights, and water, sanitation and hygiene in the margins of the 2018 HLPF.

The UN Environment Programme Finance Initiative released papers on an “impact paradigm” approach to private sector engagement, and on piloting the recommendations of the Task Force on Climate-related Financial Disclosures.

The Communiqué resulting from the meeting of G20 Finance Ministers and Central Bank Governors describes takeaways on global economy, future of work, infrastructure, financial regulation, sustainable finance, international taxation and trade.

Each year, governments conduct an in-depth review of progress toward SDG 17 (partnerships for the Goals) at the UN High-level Political Forum on Sustainable Development (HLPF). This brief, following on the examination of SDG 17 at the HLPF earlier this month, looks at recent papers, pledges and announcements relating to financial means of delivering the SDGs, including on strengthening private sector engagement and generating and protecting public finance.

At the 2018 edition of the HLPF, much attention was paid to the role of businesses and private finance in aligning with and delivering the SDG, particularly during the Partnership Exchange and SDG Business Forum, two special day-long events in the HLPF agenda. At the SDG Business Forum, the Global Reporting Initiative (GRI), Principles for Responsible Investment (PRI) and UN Global Compact launched a report titled, ‘In Focus: Addressing Investor Needs in Business Reporting on the SDGs.’ The report provides guidance to companies on orienting their sustainability reports toward investors seeking to direct capital flows to sustainable development. The paper, alongside others on business engagement with human rights, a sectoral approach for the SDGs, and water, sanitation and hygiene (WASH), was highlighted by participants at an event organized by the World Business Council for Sustainable Development (WBCSD). An additional round-up of business-related reports and papers launched at the HLPF is available here.

The UN Environment Programme Finance Initiative’s (UNEP FI’s) Positive Impact Initiative released a consultation paper that “articulates the concepts of an impact-based economy.” Titled, ‘Rethinking Impact to Finance the SDGs,’ the paper argues that the financial gap needed to meet the SDGs is primarily a business model gap. Through an “impact paradigm” approach to public-private interaction, the paper argues, the cost of achieving the SDGs can be reduced in tandem with stepping up private sector solutions. The paper also notes that the finance sector is the only non-public one that cuts across all sectors of the economy, identifying “Principles for Positive Impact” that can inform holistic impact management. The final version will be released during the UNEP FI Global Roundtable in Paris, France, from 26-28 November 2018.

Financing for climate action (SDG 13) was addressed in some initiatives outside the HLPF. The S&P Dow Jones Indices launched the S&P 500 Carbon Price Risk Adjusted Index Series. The series measures companies’ performance using a weighting scheme based on their estimated market valuation at risk from predicted carbon prices in 2030. Containing 12 global headline indices, the series is the first of its kind to incorporate future carbon prices into its assessment, and uses data from Trucost’s Corporate Carbon Pricing Tool, which was released in August 2017. It aims to enable forward-looking investors to “arm themselves in the fight against climate change and other business risks.”

UNEP FI launched a report in collaboration with Acclimatise, on piloting the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which call on banks to use scenario analysis to disclose the “actual and potential impacts” of climate risk. Titled, ‘Navigating a New Climate,’ the report is the second in a two-part series. It assesses credit risk and opportunities in the agriculture, energy and real estate industries via a working group of 16 banks that are piloting UNEP FI and Acclimatise’s methodologies. The report finds that banks can begin to assess physical climate risks in their portfolios, highlights the importance of assessing both incremental shifts in climatic conditions as well as extreme events, and highlights that banks can also analyze opportunities to support borrowers’ finance requirements around climate adaptation. A press release is available on Sustainable Brands, and a more detailed SDG Knowledge Hub write-up is forthcoming.

On public finance, Duke University’s Bermeo examines on Brookings’ Future Development blog how “micro and macro” aid can complement each other. Bermeo highlights an open letter in which 15 development economists and calls on decision-makers to move beyond micro-level, short-term foreign aid projects to tackle root causes of underdevelopment. She cautions, however, that it would be “misguided” to address root causes instead of short-term goals, articulating a case that moves beyond an “either/or” approach and works across time-horizons, leveraging synergies between short- and long-term goals.

Finance ministers and Central Bank Governors from the Group of 20 (G20) countries met from 21-22 July 2018, in Buenos Aires, Argentina. Argentina holds the G20 presidency for 2018. Ministers and governors discussed a number of topics also covered by the HLPF, including: the global economy, future of work, infrastructure, financial regulation, sustainable finance, international taxation and trade. The resulting Communiqué highlights continued global economic growth and low unemployment, but notes that short- and medium-term risks are increasing and that emerging markets remain volatile. UNDP Administrator Achim Steiner called for increasing measures to mitigate risk and reduce income inequality across and within countries, including actions towards a coherent set of international tax rules. A surveillance note and executive summary from the meeting is also available, prepared by staff from the International Monetary Fund (IMF).

Closing the meeting, Argentina’s President Mauricio Macri emphasized that the meetings help build trust among member countries, and reminded attendees that the G20 “is a gradual process of dialogue and global negotiation.” Coming up on the G20 calendar, the Civil 20 and Youth 20 Summits will take place in August, and the Leaders’ Summit will convene in Buenos Aires from 30 November-1 December 2018.

Eurodad authored a response to the meeting, arguing that the G20 is no longer able to tackle key issues and that existing initiatives are ineffective. The piece notes that the body’s shortcomings are linked to its exclusionary, informal, consensus-based structure, which not only lacks a dedicated secretariat, but also limits meaningful dialogue by shutting out developing countries and exposes discussions to being “held ransom” by powerful countries. The authors call for a replacement body in the form of “an economic coordination council elected by all UN member states, as proposed by the UN Commission of Experts on reforms of the international monetary and financial system.” An additional round-up of resources on public finance by the Overseas Development Institute’s (ODI’s) Mark Miller is available here.

The Center for Global Development’s Maya Forstater expresses concern about the proposed indicator to measure the SDG target on reducing illicit financial flows (target 16.4). She argues that it could distract from “the real, important, and difficult business of detecting and deterring money laundering, bribery, and tax evasion, and tracking the proceeds of crime and corruption.” Forstater offers test calculations for four companies to show that the current indicator is not fit for purpose, with recommendations aimed at the indicator’s custodial agencies, the UN Office on Drugs and Crime (UNODC) and the UN Conference on Trade and Development (UNCTAD).

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

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