Speech by Nicholas Rosellini，Resident Coordinator, United Nations
Sustainability Development Summit，CAIJING Performance Awards 2019
9 January 2019, Beijing, China
Ladies and gentlemen,
On behalf of the United Nations in China, it is my great honour to be part of this Summit today.
First of all, please allow me to express my gratitude to the organizers, Caijing and China Alliance of Social Value Investment, for your warm invitation.
The theme of the conference, Sustainable Development Finance, covers a broad range of issues ranging from Environmental, Social and Governance (ESG) investment and impact investment, to social finance and social value investment. My speech will focus on the global landscape of sustainable finance and the linkages between sustainable finance and the SDGs. In particular, I want to cover three seminal points: the challenges and opportunities of financial flows to achieve sustainability at the global level; the significance of China’s experience locally and globally; and the role of the UN in promoting Sustainable Development Finance.
First, there are three key international agreements that provide the foundation for sustainable financing. In 2015, countries around the world adopted the 2030 Agenda for Sustainable Development. The 17 Sustainable Development Goals（SDGs）represent a universal call to promote economic growth while protecting the planet and supporting the poor.
Meanwhile, on 12 December 2015, a landmark agreement on climate change – the Paris Agreement was reached to accelerate actions and investments needed for a low-carbon future . These two important historical agreements are highly inter-related -- the 2030 agenda recognizes that economic growth must go hand-in-hand with poverty reduction and environmental protection , while the Paris Agreement provides additional impetus for the achievement of the SDGs in the areas of water, energy, cities, infrastructure, climate and land.
Third International Conference on Financing for Development was held in Addis Ababa where the Addis Ababa Action Agenda was adopted. The Agenda establishes a strong foundation that supports the implementation of the 2030 Agenda for Sustainable Development. It provides a new global framework for financing sustainable development by aligning all financing flows and policies with economic, social and environmental priorities .
However, achieving the SDGs poses a financing challenge. Massive investments will be needed to improve human capacities in terms of health, education, and employment; to decarbonise the energy sector; to maintain sustainable agriculture and biodiversity; to build communities’ resilience to climate change; and to harness the new industrial revolution for inclusive growth. The World Investment Report highlighted that delivery of the SDGs needs an investment of between US$5-7trillion annually, and most of this will happen in developing countries.
This investment is not only about financing public goods; it is also about shifting investments from unsustainable to sustainable. This requires a systemic approach, integrating sustainability in financial policy and investment practices, and promoting new business and investment models that treat sustainable development as the fundamental purpose .
There are many opportunities to invest in sustainability aligned business. Over the past decade, we’ve witnessed a paradigm shift in the investment world. Increasingly, investors are looking for both financial and social returns and aligning their strategies with ESG; emerging innovative financing instruments, such as green bonds, where China is a world leader, and social bonds, are facilitating economic growth at lower social costs. For example, on 1 March 2018, the Republic of Indonesia launched the ﬁrst Green Sukuk and HSBC recently issued a corporate SDG bond to raise one billion U.S. dollars.
Second, China’s experience in this regard is extremely encouraging. China has been overhauling its financial system towards sustainability since 2015. China’s green bond market has been growing at an impressive pace, with total issuance passing 87.2 billion U.S. dollars by end of 2018, representing the lion’s share of the global market. China has a thriving private sector, High Net Worth Individuals and funds, which are willing to engage in the SDGs. According to the 2018 Hurun Philanthropy List, China’s top 100 philanthropists made a total of US$ 3.3 billion of public donations to foundations, NGOs and educational institutions domestically, representing a 33% increase from the previous year.
Now, China is directing reform towards institutional investors and asset managers. China Securities Regulatory Commission (CSRC), in collaboration with China's Ministry of Ecology and Environment, has introduced new requirements that, by 2020, all listed companies and bond issuers must fully disclose their data related to ESG .
Despite the achievements, SDGs-aligned finance in China is still in the very early stage. Firstly, investors are generally not familiar with concepts such as sustainable finance and impact investment. Secondly, a policy framework and innovative financial instruments aligned with the SDGs have yet to be developed. Thirdly, pipelines of bankable SDG projects need to be prepared through the collective action of stakeholders.
This leads to my third and final point, the role of the UN in promoting sustainable development and SDG aligned finance. The UN has been working on mainstreaming the 17 Sustainable Development Goals through awareness raising, integrating SDGs into national and local development plans, and supporting SDG aligned budgeting since 2016. It works on all thematic areas of development and all these thematic portfolios are calling for an effective financing mechanism to sustain and underpin their enforcement.
Last year, UNDP launched the SDG Impact Platform to catalyze financial investments from the private sector that advance the SDGs by promoting the development and adoption of universally agreed-to standards for SDG-enabling investment and supporting private sector actors to adhere to, voluntarily, when making “SDG-enabling” investments. SDG Impact’s set of products support certification of SDG contributions and enable SDG-aligned investment at scale; provide data-driven, investor-oriented market insights that illuminate specific sectors, geographies, and thematic areas of interest; facilitate matchmaking services and impact diligence for investors seeking to advance SDG progress within their portfolios.
In 2017, UNDP Asia Pacific launched the UNDP SDGs Impact Finance, (or, UNSIF in short), to proactively engage capital markets for sustainable development, and establish new business models and innovative partnerships, so that we can truly bring impact investment to scale, and replicate its proven successes within mainstream finance across the world .
At the country level, the UNDP China office is cooperating with other UN agencies such as UNESCO, financial authorities and most forward-looking academic institutions in China to co-develop clarity, insights, and tools to broker support and forge creative partnerships. In addition, it offers guidance and principles to scale SDG-aligned investment taxonomy, develops impact management and measurements methodology, and enables policies to innovate SDGs impact-financing instruments. UNDP China has supported the Guilin government, local financial institutions and Ernst & Young in the issuance of Sustainability bonds.
The United Nations Environment Programme – Finance Initiative (UNEP FI) is a partnership between United Nations Environment and the global financial sector with a mission to promote sustainable finance. More than 230 financial institutions work with UN Environment by fomenting dialogues between finance practitioners, and policy-makers, and promoting financial community involvement in processes such as the global climate negotiations . The backbone of UNEP FI constitutes a list of basic guidelines that should be followed by institutions to adhere to sustainability principles.
In the future, the UN will provide expertise on SDGs to further the SDG financing agenda, and offer advice for understanding the impact of sustainable development finance on rural and urban development, environmental protection and sustainability. We look forward to inviting all of you here in this room to engage in showing the power of and the passion towards this agenda.
Once again, please allow me to thank the organisers for such a wonderful event, and I look forward to a stimulating discussion with you all.