Domestic and foreign investment in the 10 sectors relevant to sustainable development goals (SDGs) is significantly behind, according to the first SDG Investment Trends Monitor from the United Nations Conference on Trade and Development (Unctad), released the same week as the UN Climate Action Summit.
There is an estimated total investment gap of $2500bn annually into the 10 SDG-relevant sectors, according to the World Investment Report 2014 (WIR14). The SDG Investment Trends Monitor takes a closer and updated look at this.
“Signs of progress are evident across several sectors, including in climate change mitigation, food and agriculture, and health. However, growth falls short of the requirements projected in WIR14. Even in areas where new investment initiatives and innovative financing mechanisms appear to be taking off, the order of magnitude is not yet in the range that would make a significant dent in estimated investment gaps,” concludes the monitor.
Within the food and agriculture sector, Unctad found that overall investment trends are positive, not least thanks to the increase in gross fixed capital formation in developing economies, led by China and India.
With regards to climate change mitigation, efforts have been supported by growing private investment in renewable energy, in both developed and developing economies. However, the figures still represent a small share of the investment required to address climate change, concludes the monitor.
It is important to note that Unctad’s report encountered limited data availability and poor data quality that significantly constrained its ability to assess investment trends across all SDG sectors. However, with regards to greenfield FDI, the report used the FT’s fDi Markets.
Nonetheless, the transition towards sustainable-development-oriented investment is so far not happening at the necessary scale or pace, says the report. Subsequently, Unctad has put forward an Action Plan for Investment through a six-point ‘Big Push’ strategy:
1: New generation of investment promotion and facilitation, such as through national or international SDG investment development agencies.
2: Reorientation of investment incentives through SDG investment guarantees and insurance schemes, for example.
3: Regional SDG investment compacts that promote, for example, regional SDG industrial clusters, including for regional value chains.
4: New forms of partnerships for SDG investment through home-host country IPA networks or online pools of bankable projects, for example.
5: Enabling a reorientation of financial markets through, for example, Sustainable Stock Exchanges.
6: Changing the global business mindset through global impact MBAs and training programmes for SDG investment (e.g. fund management/financial market certifications)