23 April 2018
SDG Knowledge Weekly: Blended Finance, Data and the Private Sector
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story highlights

The Blended Finance Taskforce released a ‘Programme of Action’ for mobilizing private capital towards the SDGs.

The German Development Institute published a discussion paper on Evidence-Oriented Approaches in Development Cooperation’.

The World Business Council for Sustainable Development published guidance on ‘SDG Sector Roadmaps’ to guide companies’ uptake of the 2030 Agenda.

With the 2018 Spring Meetings of the International Monetary Fund (IMF) and World Bank Group having just concluded, this brief looks at recent papers and initiatives aiming to strengthen the financial base for achieving the SDGs, including through incentivizing investment and private finance. We also look at big data among other topics in the spotlight during the annual meetings in Washington, DC.

The Blended Finance Taskforce, an initiative of the Business & Sustainable Development Commission that seeks to more effective deploy businesses’ resources so that they contribute to SDG implementation, builds on its earlier publication, ‘Better Finance, Better World,’ with a new document describing eight initiatives to shift private finance towards sustainable development objectives. Titled ‘Programme of action: Mobilising private capital for the SDGs at scale,’ the paper argues that current financial regulations (i.e. Solvency II and Basel III) disincentivize investment in emerging markets and infrastructure. Instead, it advocates for a “standardized development guarantee,” complemented by amendments to today’s financial regulatory regime. For each of the eight initiatives presented, the authors identify indicative champions and the Taskforce’s role in bringing it to fruition. The document also promotes a sectoral approach (which is also discussed in a report from the WBCSD, described below). A Devex article by Adva Saldinger summarizes the piece, highlighting the Taskforce’s call for “MDBs to step up leadership.” Previous SDG Knowledge Hub coverage of blended finance and private sector contributions to the SDGs is available here.

On the Center for Global Development’s blog, Nancy Lee discusses multilateral development banks’ (MDBs) efforts to mobilize private finance. Lee writes that, in response to shareholder demands, such efforts, known as private sector windows (PSWs), often pursue three concurrent objectives: 1) market returns, 2) high mobilization rates, and 3) high development impact. However, she emphasizes that there are tradeoffs across these, as well as mixed signals from shareholders on their priorities, noting that success is primarily found in the first objective on generating returns. To increase impact and to help bridge the finance gap needed to meet the SDGs, Lee proposes reforms to enhance risk management capability and enable greater flexibility around risk-adjusted returns. The piece goes on to recommend special purpose vehicles (SPVs) as a means of addressing gaps in capital markets (i.e. early-stage finance and pre-operational infrastructure) and increasing SDG-advancing projects’ scale and bankability, noting features that would be attractive to PSW shareholders.

It is against this context of urgent need to mobilize and guide additional finance towards the SDGs that the 2018 Spring Meetings of the International Monetary Fund and World Bank Group took place in Washington, DC, US. With the official meetings of the IMF’s International Monetary and Financial Committee and the joint Development Committee convening from 20-22 April 2018, and a range of other gatherings taking place before, after and on the sidelines, the meetings addressed a range of key topics, one of which was data, in particular issues related to security and user privacy. UN Deputy Secretary-General Amina Mohammed gave remarks at a session titled, ‘The SDGs and Big Data,’ noting data’s promises and pitfalls. To ensure big data’s safe, effective use, Mohammed highlighted, the UN Development Group (UNDG) developed a guidance note (released in late 2017) on how big data can be used – and protected – across the UN system, in support of SDG achievement. The session continued with two panels, the first of which was moderated by Claire Melamed, Global Partnership for Sustainable Development Data. Panelists noted the potential for big data, once collected, to contribute to efforts to localize the SDGs and deliver sustainable development outcomes to people. Melamed summarized the panelists’ comments as having articulated “the 5 P’s of data” – partnerships, problem solving, provision, participation, and presentation.

Connecting finance, data and statistics, the German Development Institute’s (DIE’s) Paul Marschall looks at unstructured data among other evidence sources to make recommendations for German development cooperation. His discussion paper titled, ‘Evidence-Oriented Approaches in Development Cooperation,’ defines “evidence” broadly, as “the ability to draw conclusions based on empirical available data, information and/or knowledge that an activity works,” and notes that evidence can be academic, practical/technical or social. Marschall concludes that there is a need for a stronger focus on evidence, more systematic learning, and identifying what works, with evidence being the backbone of policy-making. Marschall also stresses the importance of filling data gaps, noting that not even the best statistical offices have data to monitor progress on all SDG targets.

WBCSD published a framework of SDG Sector Roadmaps to help companies identify their most impactful opportunities and ensure they deliver.

Also on statistics, the UN Economic Commission for Europe (ECE) held the second Expert Meeting on Statistics for the SDGs from 18-19 April 2018, in Geneva, Switzerland. It built on outcomes from the first Expert Meeting, using the ‘Road Map on Statistics for SDGs’ (released November 2017) as a framework for discussions, also addressing national and regional capacity development priorities and gaps. The meeting was convened immediately following a Workshop on Reporting and Communicating Statistics for the SDGs, which discussed common challenges at both national and global level, and addressed the modernization of national statistical systems (NSS) in SDG reporting. Country presentations and additional documentation are available via the above links.

On private sector initiatives, as touched upon at the start of the brief, the World Business Council for Sustainable Development (WBCSD) published a framework of ‘SDG Sector Roadmaps.’ The document puts forward a three-step framework that helps companies: 1) benchmark their industries’ current position and level of SDGs engagement; 2) identify the greatest and most impactful opportunities; and 3) set an agenda for future actions and monitoring systems to ensure they deliver on their goals. It notes that collaboration within and across sectors is needed to achieve the SDGs, as sectoral roadmaps can articulate common visions that set entire industries on a more collaborative path to SDG contributions.

Showing the complexity of business’ role in advancing the SDGs, an article posted on the MIT Sloan Management Review, authored by Robert G. Eccles, Saïd Business School of Oxford University, and Lila Karbassi, UN Global Compact, cautions that “a company’s support for the SDGs is not necessarily a proxy for doing good.” It notes that companies can engage in “SDG washing” or positively contribute to one Goal or target while ignoring the fact that they are detracting from another. The authors stress – similar to the above guidance from WBCSD – that support for the SDGs must continue across companies’ full value chains.

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

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