Report of the Intergovernmental Committee of Experts on Sustainable Development Financing

Tuesday, October 28, 2014
Author: 
Intergovernmental Committee of Experts

Introduction

At the United Nations Conference on Sustainable Development (Rio+20), the international community agreed to undertake a major effort to promote sustainable development globally and in every nation and free humanity from poverty and hunger. Member States also agreed to establish the Intergovernmental Committee of Experts on Sustainable Development Financing (the Committee) and tasked us with developing options for a sustainable development financing strategy to facilitate the mobilization of resources and their effective use in achieving sustainable development objectives.

Rio+20 reaffirmed all the principles of the Rio Declaration on Environment and Development, including, inter alia, the principle of common but differentiated responsibilities, as set out in principle 7 thereof.

Our work is rooted in the principles expressed in the Rio+20 outcome document and in the universal values expressed in the United Nations Millennium Declaration, noting that peaceful and inclusive societies, gender equality and human rights for all, including the right to development, are strong enablers for sustainable development. Eradicating poverty is the greatest global challenge facing the world today and an indispensable requirement for sustainable development.

The Monterrey Consensus of the International Conference on Financing for Development provided a basis for our analysis, with its emphasis on the use of all forms of financing, including public, private, domestic and international in a holistic manner, as well as its recognition that each country has primary responsibility for its own development, while the global community is responsible for an enabling international environment. However, we also recognized the need to update this framework to meet the challenges of the post-2015 development agenda.

In this regard, we were mindful of the work of the Open Working Group on Sustainable Development Goals, and guided by the resolve of Member States that the post-2015 development agenda should reinforce the commitment of the international community to sustainable development based on a coherent approach that integrates its economic, social, and environmental dimensions. This approach involves working towards a set of global goals, universal in nature and applicable to all countries, while taking account of differing national circumstances and respecting national policies and priorities.

In this regard, we were mindful of the work of the Open Working Group on Sustainable Development Goals, and guided by the resolve of Member States that the post-2015 development agenda should reinforce the commitment of the international community to sustainable development based on a coherent approach that integrates its economic, social, and environmental dimensions. This approach involves working towards a set of global goals, universal in nature and applicable to all countries, while taking account of differing national circumstances and respecting national policies and priorities.

We began our analysis by assessing sustainable development financing needs, current financing flows and potential sources of financing. We found that needs are huge and the challenges in meeting them are enormous – but surmountable. Indeed, global public and private savings would be sufficient to meet the needs. Yet it is clear that current financing and investment patterns will not deliver sustainable development. In particular, expected returns on investments associated with sustainable development are often not as attractive as other opportunities, especially in the near term. At the same time, there are many competing demands on public resources, and governments have not been able to mobilize adequate public financing to undertake necessary investments that profit-seeking investors eschew.

The solution includes better aligning private incentives with public goals and creating a policy framework that encourages for-profit investment in these areas, while also mobilizing public resources for essential sustainable development activities. The quality of finance also matters. Efforts to reduce corruption and to adopt more economically and socially effective public sector policies are thus important. Policies and incentives should also aim to better match investor preference with investment needs, so that, for example, long-term sustainable development needs are not financed with short-term funds.

Our work concludes that there is no one simple policy solution. Instead, a basket of policy measures will be necessary, encompassing a toolkit of policy options, regulations, institutions, programs and instruments, from which governments can choose appropriate policy combinations. We recommend a cohesive approach, with national financing strategies as an integral part of national sustainable development strategies. While the design and implementation of policies will be on the national level, achieving sustainable development will require international support and cooperation. Our approach is based on the principle of country ownership, supported by a strengthened global partnership for sustainable development. We find that a concerted effort that draws on all actors and mobilizes all resources in an integrated manner, while maximizing their impact, will allow us to finance the investments necessary to achieve sustainable development for all.

We begin the analytical section of our report with a discussion of financing needs and recent trends in financing flows. We then present a ‘strategic approach' derived from an analysis of the flow of funds from sources to uses. The bulk of our report (Section VI) considers policy options to strengthen the four basic categories of financial resource mobilization available for financing sustainable development, namely domestic public, domestic private, international public and international private finance, with an additional focus on means for blending official and private resources and collaboration between various actors. Throughout this section, we emphasize the interplay of the different types of financing and their potential synergies. In Section VII, we address international policy imperatives for a strong international economic environment and its governance, fully aware that fractures in the global economic architecture will undermine the global project to deliver sustainable development. We conclude with a discussion of options for the way forward.

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