Next week, world leaders will convene at the 2023 SDG Summit in New York to mark the beginning of what is hoped will be a new phase of accelerated progress toward realizing the Sustainable Development Goals (SDGs). Adopted in 2015, the SDGs are a set of 17 goals that aim to improve health and well-being, reduce inequalities and exclusion, and ensure a just transition toward environmentally sustainable societies for all of the world’s inhabitants.
Challenges and Discouraging Outlook:
Despite the initial optimism, the world is currently far off-track from achieving the SDGs, as we reach the midpoint of the United Nations’ 2030 Agenda for Sustainable Development. Recent crises, including the COVID-19 pandemic, the war in Ukraine, climate change, and the global cost-of-living crisis, have not only hindered progress but also exacerbated financing gaps required to meet the SDGs. These financing gaps are estimated to range from $1 trillion to $4 trillion per year, representing 1-4 percent of global GDP, which is not an insurmountable sum.
Financing Challenges:
The COVID-19 pandemic constrained the ability of developing and vulnerable countries to invest in the SDGs and green transition. Development aid is inadequate, reaching only 0.36 percent of gross national income among OECD countries, far below the target of 0.7 percent. Vulnerable economies, like Small Island Developing States (SIDS), receive disproportionately little aid and struggle to access additional financing due to outdated eligibility criteria. Private capital is inefficiently allocated and often fails to mobilize in critical social sectors such as health and education.
Addressing the SDG Financing Gaps:
To succeed in jumpstarting progress on the SDGs, the 2023 SDG Summit must address three key areas:
1. Quantifying SDG Financing Gaps:
Accurate measurement of SDG financing gaps at the sectoral level is vital to guide national and international efforts.
Timely and high-quality data, including digitalization, should be endorsed by governments with the support of the U.N. and other multilateral institutions.
2. Reforming the Global Financial Architecture:
The existing global financial architecture is short-sighted, crisis-prone, and deeply unequal.
Proposals such as the Bridgetown Initiative, the SDG Stimulus Plan, and those discussed at COP27 and the Paris Summit focus on reforming multilateral development banks, debt architecture, and climate finance.
Emphasis is needed on mobilizing private capital and reforming the credit rating system, including innovative financing instruments and partnerships between public and private sectors.
3. Overcoming Local Barriers:
Developing countries must redesign their economic and financing systems to overcome barriers hindering their capacity to access financing resources.
Longer-term planning (20-30 years) and fiscal framework alignment with investment strategies are crucial.
Tackling corruption is essential to increase tax revenues and attract more private capital.
The Integrated National Financing Framework (INFF) combines these approaches, aligning national development strategies with financing policies and instruments. Best practices include assessing financing needs, building strategies, monitoring resource use, and ensuring strong governance and coordination.
Conclusion:
Achieving the ambitious SDGs depends on long-term investments, and addressing these three areas at the 2023 SDG Summit in New York will go a long way in supporting global efforts to bridge financing gaps and get the world back on track toward realizing these critical goals. It's not too late to make a meaningful difference, but the time to act is now.
