Remarks by UNEP Executive Director Achim Steiner at the Third International Conference on Financing for Development Tue, Jul 14, 2015
Financial system changes need to be supported by economic policy innovations that shift financial flows away from hot capital and speculation to job-creation and clean investments in the real economy. Excellencies, Colleagues, Ladies and Gentlemen:
In the last few years, we have witnessed a consensus emerging that we must engage private finance to shift not billions, but trillions, of dollars to finance sustainable development.
UNEP welcomes this trend. We believe sustainable development is a collective undertaking, involving both public and private actors. A combined effort is key to a future that puts human well-being and sustainability at the center of our economies.
There are few more fitting places to reflect on these issues than Addis Ababa. Addis is a centre of dialogue and diplomacy, home to the African Union and the UN Economic Commission for Africa. It's the capital of a founding member of the UN. Addis represents our ability to join together at critical moments to solve complex problems - like sustainable finance.
Ladies and Gentlemen, UNEP is proud to have one of the oldest and largest partnerships between the UN and the global financial sector. Since 1992, the UNEP Finance Initiative has brought together over 200 public and private financial institutions to catalyze change in the finance sector. Global banking, insurance and investment institutions have worked with UNEP to develop global principles, standards and tools for sustainable finance.
And in 2014, UNEP launched the Inquiry into the Design of a Sustainable Financial System, perhaps one UNEP's most ambitious undertakings during my tenure as Executive Director. The Inquiry looks at financial innovations from around the world that can better deliver investment into the real economy. Innovations that create the conditions for sustainable prosperity for all. Innovations that can improve human well-being.
What we at UNEP have discovered through working closely with the finance sector is that a quiet revolution is taking place. Since 2008, much effort has gone into stabilizing the global financial system. But the shape of financing is changing. UNEP is working with many central banks who have moved past stabilization to a vision of redesigning the system and aligning it with sustainable development goals.
These financial system changes need to be supported by economic policy innovations. They need to be supported by policy that shifts financial flows away from hot capital and speculation to job-creating, clean investments in the real economy. They need to be supported by markets and nations that factor in growth-killing environmental risks.
Sustainable development will rely not only on the reframing of risk but also the reframing of performance. We are moving beyond traditional metrics like GDP growth, to a complement of indicators, like inclusive or comprehensive wealth. This is a welcome change.
Indeed, lenders, investors and insurers are beginning to include environmental sustainability as a key component and driver of value. Last year, $270 billion was invested globally in the renewable energy sector. $37 billion worth of green bonds were issued in 2014. This year, it's predicted to be $100 billion worth. Innovations like green "Sukuks" are emerging, and speak to the potential of local financial instruments.
Which brings me to a central message that I want to share with you today: a significant portion of financial innovation and leadership is coming from the Global South. The People's Bank of China is a leader in green credit policies and is by far the largest investor globally in renewable energies. All Brazilian banks are now mandated to mainstream environmental considerations into lending decisions. India saw over 18 million bank accounts open in one week in that country's efforts to promote financial inclusion.
Ladies and gentlemen, mobilizing finance for sustainable development is no longer a North-South issue.
While these innovations are grounds for optimism, there is no room for complacency. Policy momentum is not near fast enough to meet the enormous financing needs required for sustainable development. The United Nations Conference on Trade and Development (UNCTAD) estimates that developing countries alone face a US$2.5 trillion annual investment gap in achieving the Sustainable Development Goals by 2030.
But we may even be missing the point by looking at incremental needs. Is the right question: how can we afford the resources needed to achieve SDGs? Or is it: how can we afford not to underwrite the future of our planet and its peoples?
What is clear is that we need a Quiet Revolution to become a Loud Revolution. Here in Addis, where so many gatherings have hastened change before this one, we need to turn this quiet revolution into something that reverberates around the world. A Loud Revolution needs to start from Addis Ababa.
Ladies and Gentlemen, I urge countries and their representatives, citizens of the international community and private sector actors to take action. Capture and upscale existing innovations. Create the conditions and policies for public and private finance to work together. In this way we can achieve a future of sustainable development, with prosperity and well-being for all.
I hope that our distinguished speakers today will draw together some of the learning and innovation that can carry this conversation forward. I invite you to join us in reflecting on how Redesigning Finance for Sustainable Development is both timely and fitting for the outcomes under consideration in Addis.
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