Global Outlook on Financing for Sustainable Development 2021
A New Way to Invest for People and Planet
The Global Outlook on Financing for Sustainable Development 2021 calls for collective action to address both the short-term collapse in resources of developing countries as well as long-term strategies to build back better following the outbreak of the COVID-19 pandemic. The financing gap to achieve the Sustainable Development Goals (SDGs) in developing countries was estimated at several trillions of dollars annually before the pandemic. The report demonstrates that progress to leave no one behind has since reversed, and the international community faces unprecedented challenges to implement the holistic financing strategy set out in the Addis Ababa Action Agenda (AAAA). The report finds that trillions of dollars in financial assets held by asset managers, banks and institutional investors are contributing to inequalities and unsustainable practices. It highlights the need to enhance the quality of financing through better incentives, accountability and transparency mechanisms, integrating the long-term risks of climate change, global health, and other non-financial factors into investment decisions. The report concludes with a plan of action for all actors to work jointly to reduce market failures in the global financial system and to seize opportunities to align financing in support of the 2030 Agenda for sustainable development.
Editorial
Some have called the COVID-19 the great equaliser, because its impacts transcend borders. But this assumes an equal playing field, which doesn’t exist. Even before the onset of the pandemic, progress to achieve the United Nations Sustainable Development Goals (SDGs) was starkly uneven across the targets and countries. The onset of the COVID-19 pandemic further eroded progress and is driving up costs to achieve the universal goals by 2030. One hundred million people have been pushed into extreme poverty and job losses have occurred across all sectors. Developing countries are still bracing for the worst, with growth prospects at their lowest level since World War II. While OECD countries are deploying trillions of dollars for recovery, fiscal space in developing countries is limited. The Global Outlook on Financing for Sustainable Development 2021 finds that recovery spending in developing countries was USD 1 trillion less than the magnitude of spending carried out in OECD countries. Sub-Saharan Africa, as a whole, would need to increase its spending packages by about 6% of its GDP. In addition, there is a risk of external private finance collapsing; already we are facing a USD 700 billion drop, 60% greater than during the global financial crisis.
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