2 December 2019
Distinguished Guests, Ladies and Gentlemen,
On behalf of the UN Secretary-General, I would like to express my appreciation to the Bosera Asset Management Ltd, and the China Alliance of Social Value Investment for your warm invitation to the UN, and for setting the theme of the forum “Sustainable Investment for a Better World” to promote sustainable finance.
In September 2015, the world’s nations agreed on an ambitious, comprehensive, universal agenda to eliminate poverty, protect the planet, and ensure prosperity for all. The 2030 Agenda for Sustainable Development is designed to ensure no one is left behind and requires a new scale of partnership and finance.
Four years later, we are at a tipping point. The latest SDG report shows that none of the goals are on track and carbon emissions continue to increase. We see the consequences in terms of climate-induced natural disasters and social instability that results in conflict and forced migration. These are global challenges which require global solutions. We know what is needed – a shift to renewables and low carbon technologies, investment in projects with high social returns, creation of decent jobs, etc. In turn, this needs broad international cooperation and shared responsibility. It needs partnership with the business and finance communities and collaborative innovation that generates outcomes with financial, social and environmental value.
At the opening of the UN General Assembly this year, the UN Secretary-General urged world leaders to step up the efforts now to achieve the 2030 Agenda and the Paris Agreement on climate change.
However, to make sure we deliver, we need not only political will, but also inclusive partnerships and adequate and sustainable financing.In September, 130 major banks representing one-third of the industry launched the Principles of Responsible Banking to advance sustainability in their products and services toward achieving the Sustainable Development Goals.
In October, along with 30 CEOs of some of the largest financial firms, representing $16 trillion in assets, the UN Secretary-General launched the Global Investors for Sustainable Development Alliance to help unlock long-term investment. The Secretary-general said: “Investing in sustainable development is not a matter of goodwill — it is the root to long-term global prosperity that works for all people while safeguarding the climate, the environment and our natural resources.”
Many are deeply committed to innovative forms of finance, including Green, Sustainable Development and Social Impact Bonds.
Financial markets are increasingly integrating sustainability in business practices. Various investors, insurers and stock exchanges have adopted social responsibility and sustainable principles.
Investors are paying greater attention to the environmental footprints of the companies in which they invest and demanding more information about climate risks and other related threats.
Several financial institutions have already started to implement the recommendations of the Task Force on Financial Disclosure.
Business and finance sectors are acting.
This is good news! However, how can we build on the progress to make best use of the resources to promote sustainability?
According to a recent analysis, there is more than $200 trillion in private capital invested in global financial markets, often at negligible rates of return, some even negative rates of return.
These funds can be channeled towards more productive sustainable investment projects, including by making use of innovative financing instruments. These are already making their mark but need significant scaling up. The green bond market has grown by 45 per cent. The use of social impact bonds has also grown significantly but there is still a long way to go.
A few things are already crystallizing. We need smart fiscal policy and financing to create the predictability that private enterprise and finance needs to put sustainability at the heart of their business models.
We can make tax systems greener, and more aligned behind the sustainable development and climate action agendas. This includes eliminating wasteful fossil fuel subsidies and putting an appropriate price on carbon.
We must align the international financial system behind the Sustainable Development Goals. That means incentivizing sustainable long-term public and private financing.
It also means revisiting financial regulations that may inadvertently encourage short-termism in financial markets.
The concept of financial inclusion was first introduced to China in 90s. UNDP was the first to pilot and scale microfinance solutions to reduce poverty across 17 provinces in China. Working closely with the Chinese government, UNDP supported the establishment of an enabling regulatory framework for a vibrant rural microfinance sector.
In recent years, China has accelerated the pace to build an inclusive finance system. The State Council incentivizes financial institutions that offer loans to small and micro businesses based on inclusive finance. Meanwhile, internet-based service providers, such as Ant Financial, have bolstered inclusive finance and created development opportunities.
Despite the impressive potential, innovative SDG financing instruments are still in their infancy, and we need more mainstream financial institutions and investors to engage in this agenda in China.
The industry lacks a comprehensive policy framework to govern innovative SDG financing instruments, such as recognized definition, standards and certification. More knowledge on financial returns and best practices are needed among investors, and the perception is that risks are still too high.
UN has made it a priority to help find solutions to financing the SDGs. The Secretary-General’s Strategy to Finance the 2030 Agenda has three priorities: align global economic policies and financial systems with the 2030 Agenda; enhance sustainable financing strategies and investment at country and regional levels; and seize the potential of financial innovation, new technologies and digitalization for inclusion.
In China, we need to build consensus among stakeholders on moving forward on SDG financing and investment: to strengthen the enabling policy environment; to develop the SDG financing ecosystem, including measurement systems and financing instruments; and to provide guidance and regulatory frameworks to scale up SDG investment.
Our society and our planet face major challenges. The success of the 2030 Agenda requires participation and collaboration among all countries and all sectors - both public and private. We look forward to engaging with investors, policy makers, and beneficiaries to promote SDG investments in China.