Financing the 2030 Agenda: Unlocking Prosperity
Bern, 18.09.2017 - Adress by President Doris Leuthard at UN Private Sector Forum 2017, 18 september 2017
The spoken word is final!
Madam President of the United Nations Global Compact,
Ladies and gentlemen,
The annual UN Private Sector Forum is a key opportunity to bring together public and private actors under the leadership of the United Nations. This year, I am pleased to join you to discuss ways to unlock prosperity for the 2030 Agenda. The topic for this year’s forum reminds us that financing already exists. What we need to do is find the keys to unlock it. We need to create incentives and framework conditions to move financing in the right direction. And we need to create employment and economic opportunities, which stand at the heart of social development.
With the 2030 Agenda for Sustainable Development, we have a new global guiding framework, and a definition of what success must look like in 2030: sustainable economic prosperity that provides social dividends.
The implementation of this transformative agenda requires massive investment in infrastructure, innovative technologies and smart concepts like the circular economy. This funding gap is estimated at 5 to 7 trillion US dollars a year, according to the UN and OECD. In developing countries alone, the annual funding gap amounts to 2.5 trillion US dollars (or 3 per cent of global GDP).
These numbers are well beyond what can be covered by individual states and Official Development Assistance alone. Private finance and business therefore have a crucial role to play. Rather than increasing the amount of financing, this will mean redirecting financial flows into green and resource-efficient investments promising good financial performance and social dividends.
Ladies and gentlemen,
We have a dire need for private investment in SDG-relevant sectors. In parallel, more and more companies have come to see the Sustainable Development Goals as a vast catalogue of business opportunities and are taking action to make a meaningful contribution. Their business activities and their value chain have a central role to play.
And I believe you’ll hear from the CEO of Nestlé what they do to create such opportunities, particularly for young people.
Worldwide, a dialogue has started and is stimulating private action to align the financial sector with sustainable development.
In Switzerland alone, the volume of investments seeking social impact in developing countries is substantial: we estimate that nearly 10 billion US dollars were invested in development in 2015 and managed by companies based in Switzerland.
This shift is significant and there are a number of keys we can use to unlock this prosperity to ensure that investments with positive social and environmental impacts become a mainstream choice:
- First, governments should not neglect the importance of the overall governance framework in countries. These include effective public administration, rule of law, a sound macroeconomic framework, low levels of corruption, and easy, transparent business procedures. All of that is essential to attract investment , including impact investments. After all, impact investment decisions are informed by the same factors that make a business environment attractive for other forms of investment.
- Second, the public sector can support a number of activities that help to reduce the cost of impact investment. For example, through a public-private partnership called the Swiss Capacity Building Facility, we are providing small technical assistance grants to financial service providers in developing countries. Its contribution reduces the entry costs for those offering financial services to low-income earners, smallholder farmers and small businesses.
- Third, financial technologies can be a powerful tool to mobilise and channel private money. A dynamic fintech system has the potential not only to boost the competitiveness of the financial sector, but also to accelerate sustainable development. One of the pioneering ideas we are developing in Switzerland is the creation of a fintech licence. This would reduce the regulatory requirements for institutions operating only in the deposit-taking business, compared with those that apply totraditional banks.
- Fourth, where it makes sense, public funds can be used to leverage private funds via guarantees or early-stage investment. One of the most successful microfinance funds in Switzerland – the responsAbility Global Microfinance Fund – was launched in 2003 with initial capital of 3.8 million US dollars from the Swiss government. Today, this is a flagship microfinance fund worth over 1 billion dollars in private capital invested in the South and East.
- Fifth, development actors and the social impact investment sector need more platforms to exchange knowledge and share experiences. This dialogue can help identify what works and what doesn’t, and ensure that the right incentives are put in place on both sides to advance the 2030 Agenda. In Switzerland, the sustainable investment community, which comprises a number of impact investors, has joined together under the auspices of the Swiss Sustainable Finance association to help establish the country as a leading centre for sustainable finance.
- Finally, people who rely on financial services want to make a difference. They want to know that their savings are being invested in green sustainable products, and they do not always have this choice. Pension funds as well as banks should enable them to make a difference.
Ladies and gentlemen,
The SDGs are a call to action. If we really want to take a sustainable path, we need to harness the full innovative power of the economy; not just financial resources, but also your talent, your ideas and creativity, and your human resources.
In the discussions to come, I look forward to hearing how you think we can find the right keys to unlock prosperity and so deliver on the promises of the 2030 Agenda.
Address for enquiries
Federal Department of the Environment, Transport, Energy and Communications (DETEC), Press and Information service, Kochergasse 6, 3003 Bern, +41 58 462 55 11
General Secretariat of the Federal Department of Environment, Transport, Energy and Communications; General Secretariat DETEC