Dear Prof Shabaz Khan, UN Resident Coordinator a.i.
Ladies and Gentlemen, Excellencies and friends,
欢迎大家出席今天的政策对话,共同探讨“推动SDG 金融, 实现可持续发展与碳中和目标。
Welcome to our policy dialogue to discuss how we finance a greener future and boost investments that supports carbon neutrality and the Sustainable Development Goals – to end poverty, reduce inequality and protect our planet.
For the last year and a half, our lives have been transformed by a devastating pandemic. In addition to the millions of deaths and people pushed into extreme poverty, COVID-19 resulted in the loss of 17.3 per cent of working hours, equivalent to 495 million full-time jobs, in just the second quarter of 2020 alone. Worldwide public debt meanwhile climbed 13 percentage points, to 97.3 percent of GDP.
Yet COVID-19 is not the biggest crisis we face. Indeed, it pales in comparison to the worst effects of climate change. The climate emergency is only growing. Last year was one of the three hottest on record, with more extreme weather, biodiversity loss and rising sea-levels. If business-as-usual continues, our world will warm by 3-5 degrees by the end of the century. This could displace one billion people, with many countries and cities – including parts of Shanghai – underwater.
All of this underlines the urgency for the world to unite for a sustainable recovery. Indeed, by early this year, countries representing more than 65 percent of global carbon dioxide emissions and more than 70 percent of the world economy, had already made ambitious commitments to reach carbon neutrality. China has pledged to get there before 2060.
To meet these important targets, it is critical that more public and private capital flows are channeled to where they are needed most. The annual gap to finance the SDGs increased in 2020 by 70% to USD 4.2 trillion in developing countries. To meet climate change, biodiversity and land degradation targets by 2050, the world needs up to USD 8.1 trillion of cumulative, total investment in nature-based solutions.
The challenge, is not the quantity of resources available, but the way in which resources are prioritized. Globally, positive signs are emerging. Governments have begun to articulate budgets in terms of a green transition (France) and aligning with the SDGs (Norway). The size of the green, social and sustainable bond market approached $1 trillion in 2020. Major investors and fund managers like Blackrock are moving away from carbon–intensive investments. Yet these are not enough to bring about system-wide change at scale.
Thus far, only a few countries have developed comprehensive financing strategies for mobilizing domestic revenues to advance the SDGs, as well as tracking and documenting green and sustainable public spending. Meanwhile, companies and investors are not yet systematically integrating sustainability and impact considerations into their decision-making.
COVID stimulus packages have been partly directed towards greener public spending and support. However, while a step in the right direction, the magnitudes involved are only a small portion of overall spending. Just 2.5 percent of the combined recovery spending of the largest 50 economies has been green, leaving much room for optimisation.
Here in China, an investment of hundreds of trillions of yuan is required to achieve carbon neutrality and the SDGs. After the 14th five-year plan set the stage with key targets for emissions and energy intensity, the upcoming sectoral plans will be key to ensuring that these targets are achieved.
Support for financing to enable emissions reductions and help achieve the net-zero goal will be critical. Indeed, given its large size and sophisticated financial market, China will have a decisive impact globally on ensuring a sustainable financial system that effectively tackles development challenges.
UNDP is dedicated to forging partnerships to build a common framework for financial decision-making guided by the SDGs, from budgeting and taxation, to financing strategies. Let me highlight a few specific initiatives:
· Firstly, to support national sustainable development strategies which lay out what needs to be financed, we have helped develop Integrated National Financing Frameworks (INFF) in more than 60 countries, which spell out how countries’ national strategies will be financed and implemented through the full range of public and private financing sources. We are also working with more than 55 countries to adopt SDG budgeting frameworks for their public expenditure.
· Secondly, we have pioneered SDG Finance standards. Our flagship initiative, the SDG Impact Standards, provides investors and businesses with the knowledge and tools to strengthen their contribution to the SDGs. These standards – for Private Equity, Bonds and Enterprises – establish a common framework for measuring, reporting on, and authenticating the impact of investments on the SDGs. In China, following the highly impactful Green Bond Catalogue, UNDP also launched the SDG Finance Taxonomy, co-created with with finance industry experts and stakeholders. This taxonomy offers a classification system with impact indicators and screening criteria for investments that can contribute to the SDGs.
o In March, we partnered with the New Development Bank (NDB) on issuing a RMB 5 billion SDG Bond, to finance a sustainable COVID-19 recovery for China. This marks the first time globally that a multilateral development bank has used UNDP’s SDG Finance Taxonomy and Impact Standards.
· Finally, our SDG Investor Maps use market intelligence to plot out profitable investments that advance the SDGs, backed by data on market profile, policy contexts, risks, and potential SDG-impact. As of 2020, maps for 15 countries have been developed. The SDG Investor Map for China covers two key sectors, namely- sustainable agriculture and healthcare.
Moving forward, in the push to achieve the SDGs, there needs to be a shift from voluntary application to institutionalization. It’s vital that governments and societies further integrate the SDGs into policies and regulations, setting standards that unleash the potential of public finance and capital markets for a green future that leaves no one behind.
Five actions are key in this regard:
1) Re-setting the relative price of renewables and fossil fuels by eliminating fossil fuel subsidies and using taxes to disincentivize emissions;
2) Aligning government spending in the post-COVID era with climate targets and the SDGs;
3) Ensuring that climate change weighs heavily in every financial decision, by mandating climate-related information disclosures;
4) Setting explicit Key Performance Indictors (KPIs) of climate change for high-emission companies and investors to ensure a clear direction towards low carbon economies and net zero emissions;
5) Promoting policies that buffer the possible disproportional impact on different groups to ensure a just and inclusive transition to carbon neutrality, which creates opportunities for everyone including vulnerable groups. Fiscal space gained from revamped carbon pricing can help resource these protective mechanisms.
The goal of this dialogue is to facilitate knowledge exchanges and engage governments and investors to explore regulatory measures and incentives that can catalyze capital flows for sustainable development in China.
I hope that together, we can commit to exploring these new frontiers, and come away with valuable insights to support the SDGs, with the funding to make them happen!
Thank you to IIGF for co-hosting with us, and thank you to everyone who has joined us today!
 State of Finance for Nature UNEP, WEF, ELD, Vivid Economics 27 MAY 2021