The United Nations Environment Program UNEP published the popular document “Financing Sustainable Development Moving From Momentum To Transformation In A Time Of Turmoil”, which highlights a detailed analysis of why we need a global financial system for the SDGs and climate safety goals.
So why do you need sustainable financing for the 2030 agenda for sustainable development and the Paris Agreement?
That’s because both of these novel initiatives need an unapologetic mobilization of private and public finance, which is roughly 90 trillion USD over 15 years.
It also addresses the fact that public finance has a few restrictions, the need to address competing priorities, and the need for private sector involvement.
The current financial system that we have doesn’t take sustainable development into account adequately, which leads to an increased risk of environmental abuse, social challenges, and economic inequalities.
The UNEP has indeed made some progress towards its sustainable development goals. A notable one is an international collaboration with the G20 green finance study group and bigger financial institutions, which promoted renewable investments and green bonds.
However, this progress is still not sufficient for financing.
- 116 out of the 140 countries declined the natural capital and didn’t acknowledge its benefits
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- Roughly 6.5 million premature deaths are observed annually, and you know why? It’s because of air pollution.
- Climate change is continuously causing adverse effects due to greenhouse gas emissions.
- A whopping amount of 26.4 million people get really disrupted annually by natural disasters.
This actually shows why we need a strong financing system to accomplish the SDGs.
But what’s the obstacle that we are facing in transforming the financing system for sustainable development goals? Let’s take a look at a few of them:
- Not getting a strong project outline and high estimated cost for establishing green infrastructure is delaying the investments.
- Undermining the long-term green investments and prioritizing the short-term financial decisions.
- Only allowing a small portion of the global financial cash flow to be utilized for sustainable development goals.
The UNEP also needs to take some transformative approaches to accelerate sustainable financing.
A few of them are discussed below:
- At number one! We have a plan to encourage countries to integrate SDGs and climate safety goals into their financial systems. A proud example includes the China Green Finance Task Force and France’s Green Bond regulations and protocols.
- Fintech innovations are often undermined, but they do have the ability to develop countries by mobilizing international funds and domestic savings.
- There is also an increasing need to utilize public funds strategically, specifically for the accomplishment of SDGs. It also requires jotting up the private capital and prioritizing green investments while aligning the fiscal policies with sustainability goals.
- We need more awareness posts to educate people on why sustainable finance is crucial for better living and for the betterment of the country. From policymakers, regulators, and market leaders, each and everyone needs to practice sustainable financial best practices. We can implement effective strategies to accomplish this.
- Not only this but with the transfer meeting approaches, we also need something by which we can assess the progress of the development. A useful method needs to be introduced to measure the progress of sustainability and its impact across financial markets.
The private sector also plays an important role in the progress of sustainable finance, as many of the institutional investors manage roughly 60 trillion USD and reaffirm that they’ll be making responsible investment outlines.
Private companies from the insurance sector also made a milestone of getting around 20% of global premiums that support only sustainable insurance practices.
Even the big stock exchange bodies, which had around 36 trillion USD in market capitalization, joined the sustainable stock exchanges initiative.
Not only this, but individual countries showed commendable leadership approaches supporting sustainable development.
Brazil came up with socio-environmental risk protocols that were written specifically for the banking sector.
Kenya encourages financial inclusion while applying new technologies that support renewable energy and health services.
India introduced the expansion of policy-directed lending for renewable energy projects.
The UNEP report not only highlights the importance of sustainable development goals but also emphasizes jotting up global finances to attain the given goals. This can only be done when measures are taken against the barriers and transformative steps are embraced.
