The public and private sectors are often seen as having incompatible objectives, but the United Nations Sustainable Development Goals (SDGs) have become a point of intersection as the UN and its partners create new avenues to finance the 2030 Agenda for Sustainable Development. The SDGs have attracted diverse types of investments in a number of areas that support their achievement. In particular, the financial services sector has pioneered a number of innovations in both financing and promoting sustainable development.
A July 17th IPI policy forum addressed the contributions of the financial sector to the 2030 Agenda and how financial institutions are integrating the SDGs into their core business. This side-event to the UN High-Level Political Forum was organized in partnership with the UN Bahrain Office and the Al Baraka Banking Group, and it brought together several of the world’s leading financial institutions to discuss how to fund sustainable development.
In welcoming remarks, IPI Vice President Adam Lupel emphasized that in order to advance a shared and practical understanding of how to accelerate Agenda 2030, financing and financial institutions are a “critical piece of the puzzle.” Building upon his remarks, Amin El Sharkawi, UN Resident Coordinator in Bahrain, added, “The private sector is becoming an increasingly important actor in the global developmental landscape.”
“We can no longer afford to conceive of social responsibility as a specialized dimension of the private sector,” Mr. Sharkawi conceded. “We must find ways to integrate social responsibility into the very DNA of how core business is conducted.” In order to do so, he said, “We must advocate for approaches such as blended finance and green investment, both of which are becoming increasingly popular avenues for private sector support to the 2030 Agenda.”
Adnan Ahmed Yousif, President and Chief Executive of Albaraka Banking Group, said, “One of our objectives for this event is to highlight these SDGs stories from the banking and the financial services sectors.” He explained that his organization was able to focus on “seven SDGs that align with four of Albaraka goals. These are namely job creation, financing, healthcare, education and clean energy.”
“None of us expected that this agenda would resonate as strongly as it has with the private financial industry,” Elliott Harris, Assistant Secretary-General for Economic Development and Chief Economist in the UN Department of Economic and Social Affairs (DESA), commented. But, in fact, for the private financial industry, the SDGs are becoming increasingly a “good business opportunity,” as environmental concerns are also a “risk to the balance sheets of financial institutions… making unsustainable investment increasingly unattractive.”
Mahmoud Mohieldin, Senior Vice President of The World Bank Group, argued that the finance sector’s investment in sustainable development was not simply a “PR function” of a bank or company to say that “we do what we can,” but that it was, in fact, a “good line of business.” He told the audience that most people have not yet realized the potential of private sector participation. “The opportunities are there, there could be some good examples here and there, and we see some interest in infrastructure projects, revival of PPPs, some good interest in renewable energy, there are some bits and pieces, but so far… we do not have an SDG consensus yet,” he said.
Shaikh Abdullah bin Ahmed Al Khalifa, Undersecretary for International Affairs at the Ministry of Foreign Affairs of the Kingdom of Bahrain, said, “I believe that without a public-private partnership many of the goals would be almost impossible to achieve.” Asked what was lacking in public-private partnerships, Mr. Mohieldin replied, “Different tracks are not speaking to each other… Now we talk about implementation, but very few VNRs submitted by governments are providing any kind of costing, or any kind of suggestion of budget any kind of signaling to the private sector.” Development, he said, required an “integrated approach.”
Muna AbuSulayman, a global SDG philanthropist, spoke on why achieving SDGs requires immediate action and how these goals differ, for businesses, from corporate social responsibility (CSR) aims. “We are finding that it is very easy to articulate the things you are already doing and put them in the SDG framework, which speaks to the differentiation between SDG funding and CSR funding,” she said. However, “We’re not playing a more active role, a more serious role in collective work to deliver on all the SDGs. We don’t want to just capture, we want to also add, otherwise we will fail to make significant changes needed for 2030.” What was necessary was deeper involvement from the financial sector as “partners, rather than merely funders,” she said. “We need to sit at the table.” She concluded, “I don’t think we’re going to reach the 2030 SDG goals if a sense of urgency is not conveyed to the major financial institutions around the world.”
Zubaida Bai is the founder and President of, ayzh Inc and Happy Woman Fund, where she has brought the perspectives of entrepreneurship and sustainable development together to invest in women entrepreneurs. “We are missing the fact that we need to be having half the population of the world leading SDG conversations,” she said. She suggested that another entry point to achieve the SDGs would be funding education for young people, since, “Per child/per annum we are investing about 300 dollars per child in the developing world. If we look at it from the developed world we are investing about 8000 dollars per child.” But, she concluded, “There is a lot of money that is going in. In our own fund that we are setting up, we are looking at the SDGs… our core is the company needs to be led by women, or the company needs to have the intention to let us come in and allow the organization to be gender neutral.”
“How do you measure success?” asked Bruno Bastit, Senior Corporate Governance and Sustainable Finance Specialist at S&P Global Ratings. He said that he had seen some “positive signs,” of qualitative change as a result of the SDGs. “There is something to be applauded,” he remarked, in that “two years ago, investors didn’t know what climate change was.” In reporting this progress, “people are looking for actual measurable results, measurable impact to judge whether or not things are moving in the right direction and whether indeed investors and corporates are doing their best to address the SDGs,” he continued. Annual reporting on sustainable development has to contain more content than “trees and flowers and saving the world,” he said.
Ali Adnan Ibrahim, First VP and Head of Sustainability and Social Responsibility at the Al Baraka Banking Group pointed out that the SDG funding gap is about three trillion US dollars. But, he added, there are 317 trillion dollars already in the global financial system.” “If you look at the asset management industry, it is already 79 trillion dollars. So there is enough money in the system, but somehow we need to bridge that gap, that’s the magic recipe, to make that money flow into the sectors.” He said that to develop a funding strategy, “portfolio alignment is something very important, very easy to do, at the same time it has to be a gradual bottom-up process and there has to be a buy-in from all teams and subsidiaries to make it happen.”
Amit Puri, Global Head of Environmental and Social Risk Management at Standard Chartered, highlighted how his bank chose to prioritize where to invest. “We are a UK headquartered bank, but we make over 90% of our revenue and profits in Asia, Africa, and the Middle East. Our footprint is in emerging markets… Financing the SDGs is inherent in our strategy,” he said, and “We believe we are doing it where it matters most… We feel it is more impactful to meet the SDGs if we do this in places like Botswana, Bangladesh, Taiwan etc.”
Rebecca Self, the CFO of Sustainable Finance at HSBC, concluded the event, saying in her experience, “it’s becoming quite clear not all of the SDGs, and particularly not all of the indicators are necessarily relevant to banks… Some or others might be more relevant for us.” But where the SDGs did apply, she argued that progress toward the SDGs isn’t necessarily clear cut. Progress can be “saying no to short-term revenue in order to achieve some of these longer term sustainability goals,” she said. “There has been progress… but there is a lot more to do.”
Jimena Leiva Roesch, IPI Senior Fellow, moderated.