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Last week, I was in New York City for an anything-but-typical U.N. General Assembly. I found myself reflecting on a question I asked back in 2015: The private sector fought for a seat at the table with the Sustainable Development Goals, but has it stepped up?
More companies and financial institutions certainly talk about SDGs or sustainability now than they did then. Some are looking at how global issues — particularly climate — are impacting their long-term profitability and sustainability. But if conversations I had in New York last week are an indication, it seems change proceeds slowly.
While environmental, social, and governance investing has boomed, it’s had relatively little impact on development finance, and financial institutions haven’t changed their risk perceptions, one U.N. leader told me. So therein lies a debate: Are some financial alchemy and new instruments that appeal to traditional risk-return appetites what are needed — or can the system change?
Also, where can and should the private sector engage? According to U.N. Secretary-General António Guterres: universal access to COVID-19 vaccines, tests, and therapeutics; building a resilient society with policies that support micro, small, and medium-sized enterprises; and a sustainable and just energy transition around the world.
SMEs and SDGs
Guterres wasn’t the only one to mention small and medium-sized enterprises. Several UNGA side events focused on their role and the growing recognition that SDG measurement and integration need to go beyond the biggest companies. To that end, the International Chamber of Commerce and GIST launched SME360X — a software platform to help SMEs measure the impacts of their operations on the environment.
One big number
“$500 billion”
—A group of 60 chief financial officers from a UN Global Compact task force have pledged to invest this amount toward the SDGs over the next five years. They also committed to link around 50% of all corporate financing to sustainable performance. The task force members and UN Global Compact aim to recruit more companies to the effort, with the goal of reaching 1,000 members by 2023.
Insuring vaccines
The U.S. International Development Finance Corporation has said it will provide $383 million in political risk insurance to help a group of middle-income countries purchase COVID-19 vaccines through COVAX and Gavi, the Vaccine Alliance.
It’s the latest in the agency’s efforts to scale health-related financing, which thus far in 2021 has amounted to nearly $600 million in commitments. That’s nearly five times the annual average for DFC and its predecessor organization.
Read more: US DFC commits $383M in insurance to back COVID-19 vaccine purchases
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Times are changing
“We are at the end already of the corporate social responsibility way of engaging, to one that is much more about core business, much more about [the] private sector being an integral partner [in] working with the U.N.”
— Marcos Neto, director of the Finance Sector Hub at U.N. Development Programme told me at Devex’s UNGA 76 event last week.Energy in, coal out
Chinese President Xi Jinping announced last week that the country’s government would no longer finance coal projects internationally. China was the last major coal financier, and it has been the largest; just check out this graphic.
The decision was cheered by many, but the situation remains complicated. China is facing power shortages and economic consequences as it tries to meet climate targets. Another question is whether or when the private sector might be pushed to stop funding coal projects.
“It is possible to continue giving electricity energy access to more and more people without further polluting and pillaging the resources of the earth,” Enel Group CEO Francesco Starace said at the U.N. High-Level Dialogue on Energy Friday. As part of its energy compact, the organization pledged to phase out coal by 2027, among other commitments.
No food without supply chains
With SMEs, supply chains, and food systems high on the agenda last week, it’s fitting that my colleague Teresa Welsh spoke with James Scriven, the CEO at IDB Invest — the Inter-American Development Bank’s private sector arm — about its work on sustainable agricultural supply chains in Latin America.
While agribusiness has remained relatively resilient in the face of the pandemic, the sector also consumes three-quarters of the region's freshwater and produces almost half of the greenhouse gas emissions, he said.
“So, our focus is not only the production of these assets in a productive way — and at a lower price and make them more efficient — but to use less of our planet,” he said.
Devex Pro: IDB says LatAm can lead on sustainable agri-supply chains
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Investments of interest
• The IKEA Foundation, the Norwegian Agency for Development Cooperation, DFC, Ferd, and KOIS have launched a development impact bond for refugees in Jordan and Lebanon, the first tranche of which will support a micro enterprise creation program to help refugees and host communities improve their livelihoods.
• DFC seeks to invest $1 billion in food security and agriculture projects over five years, the institution announced last week amid the U.N. Food Systems Summit.
About the author
Adva Saldinger@AdvaSal
Adva Saldinger is a Senior Reporter at Devex where she covers development finance, as well as U.S. foreign aid policy. Adva explores the role the private sector and private capital play in development and authors the weekly Devex Invested newsletter bringing the latest news on the role of business and finance in addressing global challenges. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.
