United Nations convenes SDG Finance Lab to mobilise institutional investment

Initiative to tap ‘vast pools’ of capital for Sustainable Development Goals

The United Nations has convened an initiative called the SDG Financing Lab to mobilize the “vast pools” of capital held by institutional investors to promote sustainable financial systems.

It took place at a high-level event at the UN Headquarters in New York yesterday organised in collaboration with the UN Environment Inquiry into the Design of a Sustainable Financial System.

It was vital, said Peter Thomson, President of the UN General Assembly, that the private sector be brought in to mobilize the investments needed to achieve the Sustainable Development Goals.

“Indeed, for example, institutional investors have vast pools of capital managed by insurance companies, pension funds, sovereign wealth funds, and philanthropic organisations,” he said in an address. “In the OECD alone these are valued at over $80trn.”

He added that shifting the investment behaviour of these “private sector actors” could transform efforts “to establish sustainable financial systems promoting long-term investments, fostering social inclusion and environmental stewardship, and generating economic growth.”

Pointing to estimates that financing the SDGs could require annual investments of around $6trn, or $90trn over 15 years, Thomson said a discussion was needed about what steps needed to be taken to “align financial markets and investment patterns” with the sustainable development agenda.He pointed out that institutional investors have divested more than $2.3trn from fossil fuel assets over the past few years.

The event featured senior sustainability speakers from Aviva, JP Morgan, Rabobank, Meridiam Infrastructure and Citi.

“Re-orient financial flows into clean, long-term, socially-conscious and economically viable investments.”

“We must create incentives,” Thomson continued, “to embed sustainability into financial decision-making, to stimulate investment in the sectors most crucial to driving sustainable development, and to re-orient financial flows into clean, long-term, socially-conscious and economically viable investments.”

He pointed to the $11trn currently invested in “negative-yielding” corporate and sovereign debt as a potential source of finance.

The move is in line with a wider push to strengthen the role of the UN in fostering sustainable finance, in line with the so-called Addis Ababa Action Agenda (AAAA) development finance ‘masterplan’. Link to video

RI is holding the first of its SDG webinars today. For more information click here