In 2015, the international policy community made a marked shift away from framing the world as donors versus recipients, to embrace a shared development agenda. With conflict‑ and climate-driven crises reminding us of our interconnectedness, this repositioning was well overdue. It’s time for the funding design for our global agenda to match this shift. Financing for sustainable development is not a cost; it is an investment. Rather than a static web of providers and receivers, today’s ecosystem of financing for sustainable development (FSD) should be seen as a dynamic market, with providers competing to respond to global demands. Healthy competition will help to drive innovation, better tailor financing to the needs of developing countries, and promote higher social and economic returns.

By Angel Gurría, Secretary-General of the OECD

The Sustainable Development Goals and 2030 Agenda have redefined global ambitions: creating a better world for all is a collective responsibility. As time passes, this agenda becomes ever more urgent – challenges such as extreme poverty and climate change can only be solved by a global, collective response.

Financing the Sustainable Development Goals (SDGs) in developing countries is a major challenge. Three years after the Addis Ababa Action Agenda (AAAA) in 2015 called on all actors - public and private - to co-ordinate better and mobilise more financial resources, the outlook is not encouraging: external finance - which many developing countries continue to depend on heavily - has been going down, largely due to the drop in private flows, and co-ordination remains poor. The trend must be reversed: financing the sustainable development of poor countries is an investment in the well-being of all nations. OECD countries must face the challenge: urgent and bold action is needed to implement the AAAA with their partners and fulfil the promise of the 2030 Agenda for Sustainable Development at home and abroad. Mobilising more finance for developing countries is not enough; the quality – i.e. the “sustainable development footprint”– of all finance must be enhanced. This Overview chapter synthesises the report's diagnosis and its recommendations for reforms in three areas: (i) better measurement of the quantity and quality of finance for the SDGs; (ii) better incentives to direct the finance already available globally to the SDGs; and (iii) better co-ordination of actors to connect the supply and demand for financing for sustainable development in developing countries.

Development policies do not take place in a vacuum. The same fast-moving socio‑economic, technological, environmental and other changes that are sweeping the world have a profound impact on both development policy objectives and on the availability of resources that can be, and are, dedicated to achieving them. This chapter provides an overview of these changes and constraints as they pertain to financing for sustainable development and the global development agendas. The chapter also provides a forward-looking perspective on what remains to be done to adapt and strengthen the sustainable development financing system.

The sustainable development finance system has profoundly changed in recent years, with a greatly expanded number of actors. The expansion raises questions about the distribution of the roles and calls for a new mapping of contributions.This chapter presents snapshots of the sustainable development finance landscape by presenting the volumes provided by different actors – external, domestic, public and private – and the repartition of different sources over time. A more granular picture is given about the different roles of actors and their resources. The chapter further examines the impact of the financial and economic shifts of recent years on these types of finance, with emphasis on the historical context and each financing type’s particular niche.

Each actor and type of finance for sustainable development has its own comparative advantages, costs and benefits. The wide range and variety of financing actors suggests new opportunities to diversify between and combine financing sources to increase their contribution to sustainable development. In an ideal world, actors would be well informed about these strengths and weaknesses, enabling them to strategically exploit each source to meet the financing needs of Agenda 2030.This Chapter provides an overview of features and factors that increase the diversity of financing available, but also increase the complexity of financing choices. The Chapter outlines the different instruments available, as well as the way a country’s income level affects the financing options it faces. Finally, the Chapter surveys some of the complex interactions between actors and financing sources. These three elements – instruments, income levels, and interactions – reinforce the need for a coherent, holistic approach across actors.

A revolution is underway to promote better measures of financing for sustainable development. The estimated volumes of financing needed to achieve the global sustainable development agenda are unprecedented – in the order of trillions of dollars. Successful delivery of the different resources by the different actors, targeted where the resources are needed most and where they can have the greatest impact, will rely on better measurement frameworks and tools. These must recognise the development footprint of all actors connected to sustainable development targets and provide a mapping of actions to identify the financing gaps, imbalances and opportunities for dynamic interactions among resources and goals. They must further leverage the opportunities to provide reliable impact-driven data, harmonising approaches across actors. For this revolution to succeed, holistic approaches will be needed to design a new financing for sustainable development compass that integrates the synergies and trade-offs of both domestic and external resources, including and beyond traditional development finance.

In addition to the need for better measures of finance for sustainable development, policies need to be designed in a way that can deliver the ambition of an integrated Addis Ababa Action Agenda. The trillions required to finance the Sustainable Development Goals are present in the global economy. However, a focus on smarter policy design to shift the trillions is needed to make the best use of existing resources and strengthen the development footprint of different actors. This means minimising leakages and maximising catalytic effects in support of sustainable development. Competition in the form of more suppliers and instruments is increasing within the financing sustainable development market, which calls for better policy guidance and coherence mechanisms to manage the risks and seize opportunities. Although sustainable and inclusive growth is primarily a domestic agenda, tackling global inequalities and poverty reduction, addressing potential shocks, and delivering on international commitments in support of the global goals cannot be achieved without stronger international solidarity and co-operation among countries and actors.

The 2030 Agenda requires a significant change in how development actors operate so that they deliver on the promise of a holistic approach. Indeed, the impact of the Addis Ababa Action Agenda should be most visible at the level of implementation and operations.This chapter outlines challenges encountered at the country level in integrating diverse sources of financing. It surveys some of the tools being tested to overcome these challenges and recommends ways forward. In short, existing tools must be strengthened, new tools developed and a significant implementation gap filled in order to realise the promise of the Addis Ababa Action Agenda.While recognising that country-led development remains the central pillar of financing for sustainable development, the chapter also encourages the integration of sustainable development at local, regional and global levels. Financing solutions must also be tailored across sectors, including for cross‑cutting policy goals such as gender equality and the climate transition.