Remarks by Angel Gurría
29 January 2020 - OECD, Paris
(As prepared for delivery)
Ladies and gentlemen,
I am delighted to open the third edition of the Private Finance for Sustainable Development Conference (PF4SD), and to welcome leaders and experts in development finance from so many different backgrounds and countries. Your presence here shows the strength of our shared commitment to address a critically urgent issue: the efficient financing of the 2030 Agenda for Sustainable Development.
Today, we are only ten years away from delivering on the SDGs, including the complete eradication of extreme poverty. This means lifting just under 10% of the world’s population – around 700 million people – out of extreme poverty over the next decade. This is an effort that we must sustain, especially now when the global economy is slowing down. In fact, there are some indications that in some regions extreme poverty is starting to grow again.
In the meantime, the climate crisis is threatening to overshadow all development challenges and to overturn hard-won gains. According to the World Bank, the worsening impacts of climate change could force over 140 million new migrants to leave their homes by 2050.
It is no longer enough to react to crises when they arise. We must get ahead of these trends with smarter investments in sustainable development. Progress towards the 2030 Agenda has been slow and uneven, and by many accounts, we are off track to meet internationally-set targets for people and the planet. Getting financing right will be critical to meet the SDGs.
Private finance plays a critical role in helping us to meet the SDGs. Imagine: shifting just 1% of total global financial assets – estimated at USD 382 trillion – could bridge the existing financing gap. Moreover, by joining forces, the public and private sectors can ensure that existing investments are better aligned with the 2030 Agenda; and help bridge the estimated USD 2.5 trillion annual investment gaps for delivering the Goals.
We must think outside the box. We must innovate and come up with new ways for the private and public sector to work together. We must create incentives and overcome barriers to shift more finance to sustainable development outcomes and spur innovation.
The good news is that shareholders are gradually shifting their attention from simple profit making to both profit and purpose. They are reorienting management towards more sustainable business practices to meaningfully address environmental, social and governance (ESG) issues. ESG investing has grown significantly in recent years, rising to nearly USD 18 trillion in assets, with additional USD 6 trillion in sustainable investing that capture some component of ESG. This is a sizeable amount of the overall USD 30 trillion sustainable investment universe, clearly suggesting that ESG is much more than a fad.
Impact investing is also capturing the growing attention of mainstream investors, whose market size is estimated at more than USD 500 billion and still growing. For many impact investors, the SDGs have become a guideline for key performance indicators.
But there is still a long way to go.
Our newly released data on blended finance shows that private finance mobilised by development finance reached USD 205 billion between 2012 and 2018. But the poorest countries only benefited of around 6 percent of it. Still, the majority of the mobilised private finance remains directed to upper-middle-income countries. This is clearly misaligned with our main objective of leaving no one behind.
Realising this shift requires co-ordinated, multilateral solutions and standards. That is why the OECD is stepping up its efforts. We have been delivering policy tools, as well as pushing for further research and discussion. And we have been supporting governments and the development community to maximise existing resources and mobilise new and additional investments. Let me share some examples with you.
First, the OECD is working hard to promote more consistent, standardised measurement of all types of flows for SDG financing. Together with the Development Assistance Committee (DAC), we are monitoring and reporting on the contribution of public and private actors through Official Development Assistance (ODA) and Total Official Support for Sustainable Development (TOSSD).
Our recently launched interactive website, the SDG Financing Lab, allows users to compare development financing across the SDGs, and identify which Goals are being met and which tend to be neglected.
We also developed the OECD-DAC Blended Finance Principles, which offer a framework to ensure blended finance is calibrated to meet accepted quality standards and achieve impact.
And we continue to pursue new evidence to measure impact. The OECD’s FDI Qualities work supports policy action to align investment with the SDGs by tracking the sustainable development impacts of FDI in destination economies. We are also helping countries shape policies to improve the social impact of private investment through the OECD Policy Framework for Investment and the OECD Guidelines for Multinational Enterprises.
Second, we are supporting countries to transform their financial systems into tools to facilitate and promote private financing for the SDGs. This is done through studies such as Financing Climate Futures: Rethinking Infrastructure, as well as the creation of the Centre on Green Finance and Investment. In developing countries, the OECD’s work on environmental, social and governance criteria helps to measure and manage the impact of sustainable investments.
And at the request of the French G7 Presidency, the OECD also delivered the report, Biodiversity: Finance and the Economic and Business Case for Action. This focuses on how the impacts and dependencies of business on biodiversity translate into risks for business and financial organisations. We are now working with the UNDP to develop a robust common framework and help align private finance and investment with the SDGs.
Last but not least, we are facilitating public and private actors to work together more effectively to provide finance for sustainable development and deliver real impact results. Our Business for Inclusive Growth (B4IG), for example, is precisely about uniting governments and businesses behind a broad-based, sustainable development agenda that places social and environmental returns at the same level as financial ones.
We are also supporting the achievement of SDG 8 (decent work and economic growth). For example, “Global Deal for Decent Work and Inclusive Growth” is bringing together governments, trade unions, employers and businesses to address challenges in the global labour market.
Moreover, the OECD Development Centre’s Emerging Markets Network (EMnet) promotes an exchange among multinationals on how to address sustainability; have a positive impact in emerging markets; and rethink business strategies to balance short-term profitability objectives with long-term sustainable development goals. Similarly, the Centre’s Network of Foundations Working for Development (netFWD) supports foundations to co-ordinate amongst themselves – and with governments – to fill gaps and identify solutions to development challenges.
Ladies and Gentlemen,
The environmental crises that we face demand radical changes. In our governments and policies, in our economic systems, in our production and consumption patterns, and, most importantly, in our financial systems. Climate change is imposing a cultural software change.
Remember the words of the Irish playwright and activist George Bernard Shaw: “Progress is impossible without change, and those who cannot change their minds cannot change anything.”
The OECD is ready to help you change. Together, we can turn this decade into the decade of real, tangible action for a sustainable, prosperous, and inclusive future for all. Thank you.