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Financing for sustainable development

 

3 Ecosoc 1

 

‘Transforming our world’[1], as the historic agenda adopted by the United Nations General Assembly in 2015 has been titled, set forth ambitious, yet achievable goals in front of the international community.Prior to this agenda, the United Nations Third International Conference on Financing for Development adopted a groundbreaking agreement addressing the issues of financing and investments for sustainable development, the so-called Addis Ababa Action Agenda[2].

Additionally, the office of incumbent Secretary General of the UN adopted a strategy for financing the 2030 Agenda recognising that ’The United Nations has a critical role in supporting the mobilization of fnance for sustainable development’[3]. The mentioned document also brought about a framework under which relevant actors such as the WorldBank, IMF, OECD and Regional development banks[4]in cooperation with the UN should strive towards generating financial means for sustainable future.

Furthermore, as one of the main UN organs, Economic and Social Council[5]in the 2019 follow-up of Addis Ababa conference reffering to mobilizing finance for climate action pointed out that’businesses would make climate investments only if they believed they would be rewarded by capital markets for their green operations, and penalized for those that were not[6].

Bearing in mind the importance of finance for achieving the Sustainable Development Goals, the annual topic of discussion in Ecosoc committee in 2020 will be generating sufficient financial funds and overcoming financial challenges that come with sustainable development. Special emphasize will be put on SDG 7 – Affordable and clean energy; SDG 9 – Industry, innovation and infrastructure and SDG 13 – Taking urgent action to combat climate change. With that being said, the discussion will encompass sectors such as energy, transport and infrastructure, industrial production and agriculture:

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The first two targets of SDG7 call upon ‘ensuring universal access to affordable, reliable and modern energy services’ and ‘substantially increase share of renewable energy in the global energy mix[7]. The share of renewable energy in final energy consumption in EU has reached 17.5% in 2015[8]. The United Nations emphasises the efficient use of energy as well as promotes long-term investments in energy infrastructure and clean energy technologies as a desirable strategies for reaching the targets. In order for governments to adopt and prudently implement the strategies towards “affordable and clean energy” they need to be able to mobilize and effectively use domestic resources. The provision of domestic funds can be achieved through sound and transparent fiscal policies and institutions, through enhancing domestic revenue, mostly tax system, and additionally through borrowing of funds whilst bearing in mind the importance of debt sustainability and averting debt crisis.

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Infrastructure comprises of transportation, access to energy, water, sanitation, but also education, hence, improvements made in infrastructure lay at the very heart of sustainable economic growth. The United Nations stresses that quality, reliable, sustainable and resilient infrastructure delivers support for economic development and human welfare. However, the impendiments to investments in infrastructure are due to risk aversion in regards to long-term investment, lack of well-prepared investable projects or lack of funds, which is the case in the least developed countries. The UN recognises essential role of development banks and otherfinancial institutionsin the process of financing infrastructure investments.

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Private and public cooperation is essential in providing suffiecient funds for sustainable industrial production. Businesses need to apply energy-efficient and environmentally sound tecnologies and industrial processes in each segment of their supply chain as well as use their innovative and creative energy to encourage individuals to behave in a sustainable and nature-responsible manner. When making decisions about investments, businesses should take care of the well-being of all stakeholders including consumers, employees, government, shareholders and communities from which they draw resources.The challenging point here is how to align the interests of public and private sector and provide the right incentives that could encourage businesses to disclose their reports on sustainability.In addition to responsible investing, it is of utmost importance to properly manage industrial waste and chemicals, so that the adverse impacts the waste has on human health and environment can be minimized.

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The global food production is expected to reach a market value of 12 trillion USD by 2020[9]. Even so, with the ever increasing population of mankind famine remains a big issue. It is estimated that almost a third of all annualy produced food is thrown to waste. In addition to that, climate change is impacting more and more crops and livestocks especially in the low-latitude areas where the climate is already too hot. The new models such as genetically modified food products which can endure harsher climate conditions have yet to be tested in regards to human health. Furthermore, the agriculture sector remains heavily subsidised in most of developed world making it more difficult for developing and least developed countries, which rely the most on agriculture products, to compete on those markets.

Althought significant funds are still required to finance the ambitious projects of sustainable development, wide recognition and participation in solving this problem is quite encouraging. In order for the solution to be found countries would have to change their domestic resources consumption, partner with private sector and enhance international cooperation for the goal of sustainable development. As the Secretary General of UN Antonio Guterres has pointed out “Our efforts to achieve the Sustainable Development Goals will require a surge in financing and investments.”

[1]Sustainable Development Agenda (https://www.un.org/sustainabledevelopment/development-agenda/)

[2]Addis Ababa Action Agenda (https://www.un.org/esa/ffd/wp-content/uploads/2015/08/AAAA_Outcome.pdf)

[3] United Nations Secretary General’s Strategy for Financing the 2030 Agenda (https://www.un.org/sustainabledevelopment/wp-content/uploads/2018/09/SG-Financing-Strategy_Sep2018.pdf)

[4]Introduction of the Secerary General’s Strategy for Financing the 2030 Agenda

[5]Economic and Social Council (https://www.un.org/ecosoc/en/about-us)

[6]Summary by the President of the Economic and Social Council of the forum on financing for development (https://www.un.org/ga/search/view_doc.asp?symbol=E/2019/71)

[7] UN Declaration Containing Sustainable Development Goals and Targets (https://sustainabledevelopment.un.org/post2015/transformingourworld)

[8] Eurostat (https://ec.europa.eu/eurostat/documents/2995521/9571695/8-12022019-AP-EN.pdf/b7d237c1-ccea-4adc-a0ba-45e13602b428)

[9] According to Plunkett Research (https://www.plunkettresearch.com/complete-guide-to-the-food-industry-from-plunkett-research-2018/)

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