The UN has published the 2023 report on financing for sustainable development, which calls for “massive” investments in sustainable transformations in electricity, industry, farming, transportation, and buildings, to close the widening development gap between countries, meet climate goals, and achieve the SDGs.

The Financing for Sustainable Development Report (FSDR) 2023 themed, ‘Financing Sustainable Transformations,’ highlights some positive findings on financing for sustainable development. These include:

• While the energy crisis, triggered by the war in Ukraine spurred global spending on the energy transition, which in 2022 rose to USD 1.1 trillion, surpassing fossil fuel investments for the first time, most of this spending was concentrated in developed countries and China.
• The green economy became the fifth largest industrial sector by market value, estimated at USD 7.2 trillion in 2021.
• Between 2021 and 2022, the world added 338 million regular internet users, representing an increase of just shy of 1 million additional people per day.

However, unlike their developed counterparts, most developing countries do not have the resources to invest in sustainable transformation due to massive fiscal pressures associated with the COVID-19 pandemic, skyrocketing debt payments, and the war in Ukraine, the report warns. It estimates that by 2027, LDCs and other low-income countries will need USD 220 billion in external financing. This is 30% more than what they needed in 2021.

The report also highlights persisting disparities in manufacturing capacity. For example, in African least developed countries (LDCs), manufacturing value added fell from around 10% of gross domestic product (GDP) in 2000 to 9% in 2021. SDG target 9.2 calls for a doubling of its share by 2030. The report recommends targeted policies to increase domestic productive capabilities that would help achieve low-carbon transitions while creating decent jobs, boosting economic growth, and ensuring gender equality.

“Without delivering a reformed international financial system while scaling up investments in the SDGs, we will not deliver on our shared commitment to the 2030 Agenda for Sustainable Development,” said UN Deputy Secretary-General Amina Mohammed at the report’s launch. As per the report’s findings, such reform would need to include revised frameworks for:

• International tax norms, including rules for taxing digitalized and globalized business that meet developing countries’ needs;
• Policy and regulatory frameworks to better link profitability of the private sector with sustainability;
• Evolving the scale and mission of the multilateral development bank (MDB) system;
• Prompt operationalization of the loss and damage fund on climate change;
• Debt relief and major improvement to the international debt resolution architecture; and
• Multilateral trade rules to revise the approach to and resolve current tensions on green subsidies.

The report was launched on 5 April 2023. The FSDR is produced each year by the UN Department of Economic and Social Affairs (DESA) in collaboration with the UN’s Inter-Agency Task Force on Financing for Development, which includes over 60 international organizations. The report assesses progress in implementing the seven action areas of the Addis Ababa Action Agenda (AAAA) on financing for development (FfD). Its findings will inform discussions at the UN Economic and Social Council’s (ECOSOC) Forum on FfD Follow-up, taking place from 17-20 April 2023. [Publication: Financing for Sustainable Development Report 2023: Financing Sustainable Transformations] [Publication Landing Page] [UN Press Release]