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Sustainable Development Finance, Current Trends and Maximizing Impact
The document discusses sustainable development finance and maximizing the impact of investments to achieve the UN Sustainable Development Goals. It covers trends in sustainability, how to finance development through public and private means, implementing goals at the local level through programs in various countries, and using data and technology like blockchain, big data, and competitions to track progress and support women entrepreneurs. The World Bank is working with partners to mobilize trillions needed for development through approaches like blended finance, sustainability indexes, green bonds, and emphasizing the role of both domestic public spending and private sector finance.
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Presentation on Sustainable Development Finance and topics including SDGs and financing trends.
Overview of SDGs compared to MDGs, highlighting the increase in goals, targets, and indicators, with a focus on holistic development.
Discusses the integration of sustainability in markets, addressing climate-related financial risks and recommendations from central banks.
Highlights global stock exchange sustainability activities and the introduction of CSR indices to promote sustainable practices in companies.
Outlines the need for massive investments to achieve SDGs, emphasizing a shift from billions in ODA to trillions in investments.
Introduction of the Cascade Approach and best practices for impact investing, focusing on strategic objectives and risk management.
Emergence of impact investments and innovative financial instruments, including SDG-linked bonds and blockchain-based financing.
Examples of local initiatives and strategies in various countries to enhance engagement, services, and urban sustainability.
Utilization of Big Data in various countries to enhance accessibility, governance, and monitoring of SDGs.
Opportunities provided by Big Data for SDGs, along with potential risks regarding privacy, inequality, and data protection.
Showcases partnerships and competitions aimed at fostering innovation and inclusivity among women entrepreneurs supporting SDGs.
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Sustainable Development Finance, Current Trends and Maximizing Impact
- 1. Sustainable Development Finance, CurrentTrends and Maximizing Impact Dr. Mahmoud Mohieldin Senior Vice President World Bank Group Wharton, University of Pennsylvania April 30, 2019 Mahmoud Mohieldin Senior Vice President World Bank Group
- 2. Contents 2 1. The SustainableDevelopment Goals (SDGs) 2. Trends on Sustainability 3. Financing & Financial Innovation 4. Implementation & Localization 5. Data & Sustainable Development
- 3. 3 The Sustainable DevelopmentGoals MDGs (2000-2015) SDGs (2016-2030) Goals 8 17 Targets 21 169 Indicators 60 ~230 Priority Areas Human Development Holistic: Economic, Social, Environmental Scope Developing Countries Universal
- 4. The Growing Needto Integrate Sustainability into Markets 4 Source: Values at risk? Sustainability risks and goals in the Dutch financial sector, De Nederlandsche Bank (2019)
- 5. With insurers shouldering$160 billion in climate-related losses from last year alone, a group including 30 central banks called for measures to spur green finance and better assessment of the risks from higher global temperatures. Recommendations for how central banks and financial services regulators should act include: 5Source: https://www.bloomberg.com/news/articles/2019-04-17/with-climate-losses-rising- central-banks-push-greener-finance 01 02 03 04 Injecting climate-related risks into the monitoring of broader financial stability and threats to the banking system. Using sustainability criteria to shape the portfolios of assets maintained by central banks. Identifying areas where more data is needed to describe threats coming from environmental issues. Prodding financial market participants to better disclose climate-related risks, an effort that builds on G20’s Taskforce on Climate Related Financial Disclosure. 05 Developing a “taxonomy” of economic activities for policy makers and companies to use in assessing climate-related impact on finance. Integrating Sustainability into Markets
- 6. Stock Exchange-related SustainabilityActivities (global) 6 Source: 2018 Report on Progress, Sustainable Stock Exchange Initiative http://www.sseinitiative.org/wp- content/uploads/2018/10/SSE_On_ Progress_Report_FINAL.pdf
- 7. Annual Issuance ofSustainable Finance, $bn 7
- 8. The index isdesigned to track the performance of the top 100 listed companies on the Egypt Stock Exchange that demonstrate leadership on environmental, social and corporate governance (ESG) issues covering a number of variables Sustainability and transparency have become overriding corporate themes worldwide, the index aims to create healthy competition among listed companies with regard to their corporate governance practices Markets and the SDGs: S/P ESG as an example Source: New CSR index tracks performance of listed companies on the Egypt Stock Exchange, UNDP (2010) https://www.undp.org/content/undp/en/home/presscenter/pressreleases/2010/03/25/new-csr- index-tracks-performance-of-listed-companies-on-the-egypt-stock-exchange.html 8
- 9. 9 Financing the SDGs Tomeet the investment needs of the SDGs, the global community needs a paradigm shift - move the discussion from “billions” in ODA to the “trillions” in investments of all kinds Achieving the SDGs will require the best possible use of each available grant dollar, beginning with ODA from governments and philanthropy, remittances, South-South flows, other ODA, and FDI To reach the needed trillions, additional flows must come from two main pillars: public domestic resources and private sector finance
- 10. 10 Maximizing Finance for development •The World Bank Group’s crucial effort to redefine our approach to development finance: leveraging the private sector in ways that optimize the use of scarce public resources • It is nearly impossible to meet the SDGs by relying on public funding alone • The private sector can play a much bigger role in socially and environmentally responsible development, both as an investor and as a source of innovation and expertise
- 11.
- 12. 12 Impact Investing Strategic intent 1. Definestrategic impact objectives consistent with the investment strategy 2. Manage strategic impact and financial returns at portfolio level Origination & Structuring 3. Establish the investor’s contribution to the achievement of impact 4. Assess the expected impact of each investment, based on a systematic approach 5. Assess, address, monitor and manage the potential risks of negative effects of each investment Portfolio management 6. Monitor the progress of each investment in achieving impact against expectations and respond appropriately Independent verification 9. Publicly disclose alignment with the principles and provide regular independent verification of the extent of alignment Impact at exit 7. Conduct exits, considering the effect on sustained impact 8. Review, document and improve decisions and processes based on the achievement of impact and lessons learned Nine Principles
- 13. A growing numberof investors are incorporating impact investments into portfolios. Many are adopting the SDGs as a reference to illustrate the relationship between their investments and impact goals. CAD 1 billion bond was issued in January, which raises awareness on gender equality in relation to SDG5 10-year anniversary of the SDG green bond which raised over 1.3 billion US dollars in equity through over 60 orders from investors The WBG launched the SDG-linked BNP Paribas bonds under the “SDGs Everyone” initiative. Investors benefit from the performance of companies included in the equity index 13 Innovative Financial Instruments
- 14. Sustainable Finance: bond-i Theworld’s first bond to be created, allocated, transferred and managed through its life cycle using distributed ledger technology Two-year bond raised A$110 million, marking the first time that investors have supported the World Bank’s development activities in a transaction that is fully managed using the blockchain technology. Source: https://www.worldbank.org/en/news/press-release/2018/08/23/world-bank- prices-first-global-blockchain-bond-raising-a110-million 14
- 15. 15 Localization and Implementation U.K.Midlands: Successful locally owned businesses help develop local markets, create innovation, success and redistribution in a self- reinforcing cycle Tunisia: E-government services and portal stimulates citizen engagement and policy discussions Big Data Hackathon (2017) encourages start-ups and institutions to make Big Data innovations Ghana: MasterCard and IFC use big data to promote access to financial services for the poor Indonesia: A program is being implemented to enhance the capacity of local governments to improve efficiency and effectiveness of local public spending. Also implemented the PNPM program: community driven development Kenya: Open data initiative makes government data available to the public E-government portal facilitates ‘one stop shop’ for citizens Egypt: Government services development program provides speedy delivery on such as education enrolment and legal services Colombia:
- 16. 16 Localization: Spotlight onIndonesia In 2015, about 54% of Indonesians lived in cities and this is expected to grow to 68% by 2025. The WBG is embarking on a flagship analytic study on urbanization that can help shape Indonesia’s strategy to make its cities more livable, inclusive, and sustainable engines of economic growth. The government also partners with the WBG on a national plan to upgrade slums aimed at improving access to urban infrastructure and services, as well as an affordable housing program, using both public and private capital to provide housing to over 2 million Indonesians.
- 17. 17 The WBG usesBig Data for the SDGs Haiti Mobile technology links citizens to jobs, services and economic opportunities The Philippines The government uses GPS data from taxis to reduce accidents and improve emergency responsiveness Sri Lanka Night light data indicates that 45% of the country is urbanized
- 18. 18 ➢ Spending patternson mobile phone services can provide proxy indicators of income levels ➢ Crowdsourcing or tracking of food prices listed online can help monitor food security in near real-time ➢ Mapping the movement of mobile phone users can help predict the spread of infectious diseases ➢ Citizen reporting can reveal reasons for student drop-out rates ➢ Analysis of financial transactions can reveal the spending patterns and different impacts of economic shocks on men and women ➢ Sensors connected to water pumps can track access to clean water ➢ Smart metering allows utility companies to increase or restrict the flow of electricity, gas or water to reduce waste and ensure adequate supply at peak periods ➢ Patterns in global postal traffic can provide indicators such as economic growth, remittances, trade and GDP ➢ Data from GPS devices can be used for traffic control and to improve public transport ➢ Speech-to-text analytics on local radio content can reveal discrimination concerns and support policy response ➢ Satellite remote sensing can track encroachment on public land or spaces such as parks and forests ➢ Online search patterns or e- commerce transactions can reveal the pace of transition to energy efficient products ➢ Combining satellite imagery, crowd-sourced witness accounts and open data can help track deforestation ➢ Maritime vessel tracking data can reveal illegal, unregulated and unreported fishing activities ➢ Social media monitoring can support disaster management with real-time information on victim location, effects and strength of forest fires or haze ➢ Sentiment analysis of social media can reveal public opinion on effective governance, public service delivery or human rights ➢ Partnerships to enable the combining of statistics, mobile and internet data can provide a better and real-time understanding of today’s hyper-connected world Using Big Data to Track the SDGs Source: UN Global Pulse 2017
- 19. 19 Big Data: Opportunitiesand Risks Gain real-time insights into people’s well- being and target development interventions to vulnerable groups Enable more agile, efficient and evidence- based decision making that is inclusive and fair Shed light on disparities in society that were previously hidden May impede data sovereignty and individual rights without sufficient data protection measures Possible increases in inequality between the data ‘haves’ and ‘have nots’
- 20. 20 Using Big Datato Track the SDGs The WB’s World Development Indicators: A comprehensive global view with over 1500 indicators The Atlas of SDGs: A visual guide to the SDGs
- 21. 21 Using Big Datato Track the SDGs: The Atlas of SDGs
- 22. 22 • A partnershipbetween the World Bank Group and the Wharton School, among others. • In 2018, the Ideas for Action (I4A) competition had 3,100 submitted applications from 142 countries and territories. • The top 10 winners will be published in a book, top 3 winners will participate in the WBG-IMF Annual Meetings. ideas4action.org Follow us @Ideas4Action
- 23. 23 The World BankGroup, in partnership with UNDP, UN Women, and the Wharton School’s Zicklin Center, launched SDGs&Her, an online competition to identify women entrepreneurs across the world, whose business operations help support the SDGs. With the objectives to: (i) recognize women implementing the SDGs, including women business owners of microenterprises; (ii) increase knowledge about the SDGs and their potential impacts on women among non- traditional audiences; and (iii) collaborate with private sector partners on all SDGs, but SDG5 in particular; to share best practices and innovative ideas. Vandana Suri from India, owner of Taxshe, and Saida Yusupova from Uzbekistan, owner of Green Business Innovation, were the winners of the 2019 SDGs & Her competition.
- 24. Mahmoud Mohieldin Senior VicePresident World Bank Group worldbank.org/sdgs Follow us on twitter @WBG2030 Mahmoud Mohieldin on Wharton, University of Pennsylvania April 30, 2019 Mahmoud Mohieldin Senior Vice President World Bank Group