Highlights from:

Zhan, J. X., & Santos-Paulino, A. U. (2021).

Investing in the Sustainable Development
Goals: Mobilization, channeling, and
impact. Journal of International Business
Policy, 4(1), 166-183.
Do not cite these slides. Read and cite the article and/or the sources
within the article.
 Abstract (Zhan & Santos-Paulino,2021)
 Challenges to attaining the SDGs by 2030
 mobilizing funds – $2.5 trillion annual financing gap for developing countries
 directing investment into SDG sectors
 maximizing positive impact
 regulatory difficulties in promoting SDG investment

 Advice for guiding private sector investment in the SDGs:

1. Mainstream the SDGs into national and international investment policies and
promotion strategies
2. Use financial instruments to motivate sustainable development
3. Build special SDG model zones
4. Promote better ESG standards, compliance, and reporting
 Background

 UNCTAD World Investment Report https://unctad.org/system/files/official-

document/wir2014_en.pdf

 Global covid effort boosted the growth of sustainability funds, particularly social
bonds

 Investment in some sectors is stagnant: education and water & sanitation

 FDI (i.e., in greenfield investment and project finance) has been low - International
project finance in developing countries over 2015–2019 was an average of $418
billion annually, down 32 percent from the pre-SDG period (2010–2014).

 stagnant global outward investment trends; regulatory and absorptive capacity

constraints in many host countries
 Background
 10 SDG sectors (See Table 1 for funding trends in each sector):
Power, Transport Infrastructure, Telecom,
Water/Sanitation/Hygiene, Food/Agriculture, Climate Change
Mitigation, Climate Change Adaptation, Ecosystems & Biodiversity,
Health, Education

 Public sector is the dominant funder and more private investment is

needed

 Investment went backward over the pandemic years (especially in

developing and transition countries), except:

 renewable energy projects almost doubled, contributing to the

achievement of SDG 13 on climate action.
Figure 1 – Smallest investment in Education & Water
Announced greenfield FDI projects in developing economies, estimated capital
spending by SDG sector ($US billions). Source: UNCTAD (2020).

Capital spending
for greenfield
FDI projects was
$134 billion
annually, on
Average, during
2015–2019 (Fig. 1).
p.169
 SDG Financing: A growing number of sustainable
financial products
 Financial products target ESG- or SDG-related themes or sectors
re: clean energy, clean technology, sustainable agriculture, food
security
 Funds in sustainable development are $1.2–$1.3 trillion

 These funds are primarily:

1. sustainability-themed equity funds ($900 billion)

2. green bonds ($260 billion)

3. social bonds ($50 billion) including COVID-19-response bonds

($55 billion)
SDG Financing: A growing number of sustainable financial
products
Sustainability-themed funds: mutual funds, exchange-traded funds use ESG criteria
in the security selection process

 3100 of these funds worldwide, mostly in developed economies (UNCTAD)

Green bonds: investments in climate action (SDG 13), affordable and clean energy
(SDG 7), and sustainable cities and communities (SDG 11) (energy, building, and
transport) – Green bond markets in Europe and Asia Pacific are growing rapidly,
maturing in North America, infancy in Latin America and the Caribbean, and Africa

Social bonds: investments in: SDG 1 (no poverty), SDG 3 (Health, COVID-19 relief),
SDG 6 (Clean water and sanitation), SDG 9 (Industry, innovation, and infrastructure),
SDG 11 (Sustainable cities and communities), SDG 15 (Biodiversity and ecosystems)
Global capital markets to achieve the 2030
SDG Agenda – Sustainable Stock Exchanges
 The United Nations Sustainable Stock Exchanges (SSE)
initiative reports on the sustainability activities and
mechanisms of 102 stock exchanges around the world – See
Figure 6 for key indicators of progress

 Stock exchanges (SEs) train on ESG with courses

 SEs promote ESG disclosure by publishing guidance on

disclosing ESG information re: corporate sustainability
reporting
Global capital markets to achieve the 2030
SDG Agenda - Corporate reporting on SDGs
Corporate sustainability reporting:

 Gender equality:

 70% of the world’s 5000 largest MNEs now report on gender equality - about 80% of
companies have published a diversity policy

 Women’s representation is unequal: Regulation and investor pressure have led to better
representation at the board level, but not at managerial levels.

 The implementation of gender-equality policies related to flexible work and childcare

remains weak

 Integrate the SDGs into sustainable corporate behavior - Map the SDGs to the work
of an organization

 Integrate into company and organizational road maps, missions, pathways, and codes of
conduct.
Global Reporting Initiative; SDG Compass
 Global Reporting Initiative - the world’s most widely
adopted sustainability reporting standard

 SDG Compass - provides an inventory that maps business

indicators to SDG targets

 GRI published three SDG reporting tools to help companies

incorporate SDG reporting into their practices

 GRI recommendations for national policymakers on using

corporate reporting to strengthen the SDGs
Build special SDG model zones
 What are some of the problems with Special Economic Zones?
 Make Special Economic Zones (SEZs) work for SDGs:
 See: https://worldinvestmentforum.unctad.org/session/special-economic-
zones-engines-sustainable-development-goals
 “SEZs are geographically delimited areas within which governments promote
industrial activity through fiscal and regulatory incentives and infrastructure
support” (See https://unctad.org/news/new-global-alliance-special-
economic-zones-boost-development).
 Eco-industrial park: “An eco-industrial park is a community of businesses
located on a common property in which businesses seek to achieve enhanced
environmental, economic and social performance through collaboration in
managing environmental and resource issues” (See
https://www.unido.org/our-focus-safeguarding-environment-resource-
efficient-and-low-carbon-industrial-production/eco-industrial-
parks#:~:text=An%20eco%2Dindustrial%20park%20is,managing%20environmen
tal%20and%20resource%20issues
 Four Guiding Principles for Private Sector SDG Investment - SDGs
provide public goods and frontline services
1. Balance liberalization with regulation

 Private sector involvement requires balancing market access with public regulations
and oversight

2. Balance corporate risk-return rates with public interest in equitably accessible and
affordable services
 Corporate actors interests in returns for taking risks need to be weighed against the
requirement to ensure the accessibility and affordability of goods and services.

3. Balance private investment with public investment

 Private sector investment is not THE solution on its own, but it may complement and
support public sector investment – need a coherent strategy

4. Balance the global scope of the SDGs with the need to address SDGs in least
developed countries (LDCs)
 Persistent development challenges in LDCs require tailored national and
international measures