Launch of the 2021 Global Outlook on Financing for Sustainable Development
Remarks by Angel Gurría
Paris 9 November 2020
Ladies and Gentlemen:
Welcome to the launch of the 2021 OECD Global Outlook on Financing for Sustainable Development. This edition – the second of our biennial series – highlights the severe impact of COVID-19 on financing for the Decade of Action to deliver on the Sustainable Development Goals (SDGs).
We are currently fighting the worst health, economic and social crisis in our lifetime. And developing countries are among those hardest hit. According to the 2021 OECD Global Outlook, 90 out of 122 developing countries are now in economic recession: the highest number at any time since the Second World War. Extreme poverty is on the rise for the first time in over two decades. COVID-19 risks eviscerating developing countries’ progress towards the SDGs. To move forward, we need a multilateral system that brings governments together around hard facts, that is equipped with the right tools and expertise, and that strengthens our shared resolve to deliver on the 2030 Agenda.
Even before COVID-19 hit, SDG financing was falling short, with an estimated annual gap of 2.5 trillion dollars. Developing countries face an estimated gap of 1 trillion dollars in COVID-19 emergency and response spending. And in 2020, external financing to developing countries is expected to drop by an estimated 700 billion dollars. The 2021 OECD Global Outlook suggests that annual SDG financing gap in developing countries could thus increase by 1.7 trillion dollars, or by about 70%, in 2020.
We need urgent action to shift the balance in favour of sustainable and inclusive development. Levels of ODA must be maintained and commitments must be met. ODA should also be leveraged to catalyse broader sources of financing for greater sustainable development impacts.
If we look at financing for sustainable development through the aid lens alone, we miss the big picture. The trillions we need are already in the system. Total financial assets held by banks, institutional investors and asset managers are valued at more than 379 trillion dollars, having grown at 5.9% on average per year since 2012. According to the 2021 OECD Global Outlook, shifting only 1% of these financial assets (i.e. 3.8 trillion dollars) could be enough to fill the growing gap in financing for sustainable development. This can be done, for example, by better integrating the long-term risks of non-financial factors such climate change and global health.
The policies, resources and unprecedented stimulus packages that OECD countries have implemented in response to the pandemic – including on taxation, investment and remittances – can also be mobilised to support more sustainable and inclusive investment and finance. Canada, for example, has announced that businesses with revenues of 300 million dollars or more, and requesting COVID-19 economic aid, will be required to disclose their climate impacts and commit to making environmentally sustainable decisions.
Business and finance communities are already moving forward on sustainable finance and investment. In recent years, trillions of dollars have flowed into investments that are assessed using environmental, social and governance (ESG) criteria. In the COVID-19 context, attention to non-financial ESG risks is more important than ever, both for sustainability and as a competitive factor to win market share and investment.
However, actors in development finance and beyond must collaborate closely. They must work to harmonise different standards, metrics, frameworks and methodologies. Otherwise, achieving the twin goals of financial and non-financial returns will remain elusive.
Ladies and Gentlemen:
OECD Member countries have a central role to play in enabling greater, and more impactful, investments. Investments that are strongly aligned with the SDGs.
You can count on the OECD to provide the data, the analysis and the policy advice needed to spur a strong, resilient, green and inclusive recovery.