The UN climate conference in Glasgow brought fresh commitments from financial institutions to align investments with the 2015 Paris Agreement on Climate Change. However, if unaccompanied by investments to improve the lives of people around the world, the effort may be doomed from the start, write Nadia Isler, director of SDG Lab at UN Geneva, and Sandrine Salerno, executive director of Sustainable Finance Geneva, the organiser of the Building Bridges summit which kicks off today.
Lest we forget, climate action is but one of the 17 United Nations Sustainable Development Goals. Covering a wide range of topics, including poverty, hunger, health, education and biodiversity, the goals are deeply interconnected – a lack of progress on one hinders progress on the others. The transition to a sustainable economy – one that protects the planet and promotes prosperity and wellbeing for everyone – requires mobilising finance for all the SDGs, social as well as environmental.
Yet, the social aspects have long taken a backseat to environmental concerns with investors. The coronavirus pandemic brought this bias into stark relief, exposing and, in some cases, exacerbating longstanding challenges. At the same time, it demonstrated the materiality of how companies treat workers, suppliers, and customers. Examples abound of the public backlash against businesses that mismanaged their response to the virus. Issues not previously on investors’ radar, such as social protection nets and workplace health and safety, now loom large.
After this much-needed wake-up call, the question is where do we go from here? Recognising that people matter is not enough. In a world increasingly worried about global inequality, we need to unlock more capital for goals like gender equality, decent work, and quality education and health care. This means using finance to promote socially responsible business practices and to create opportunities for positive change.
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Sustainable finance accelerated during the pandemic, reflecting the urgency around both social issues and the climate crisis. While these investment strategies are attracting more money than ever, the pace and scale are still insufficient to achieve the SDGs by the agreed 2030 deadline. Greater alignment with the SDGs would not only accelerate progress, it would also make sure the quest for a better world does not pit people against the planet.
The SDGs recognise that sustainable development requires the balanced integration of all three dimensions – economic, social, and environmental. Environmentally-sound activities will not be tenable if based on poor working conditions, harming customers, or communities. Likewise, society cannot thrive and prosper in an unhealthy environment.
Awareness is growing of the importance of the SDGs as a global framework for finance. Encompassing 169 targets tracked by 232 indicators, they provide unparalleled detail and scope for engagement on all dimensions of sustainability. What’s more, they can unleash an avalanche of market opportunities.
Scaling up SDG-aligned finance will require overcoming barriers, including persistent concerns about the sustainability credentials of companies and investment products. Finding solutions to such complex challenges calls for more collaboration of the kind on display during Geneva’s upcoming Building Bridges Week. Not your typical finance conference, it includes participation from all sectors of society – public, private, and non-profit.
The world committed to the SDGs in 2015, paving the way for the Paris treaty on climate. It is high time we live up to both agreements that are intrinsically linked and complementary.
Nadia Isler is the director of the SDG Lab at UN Geneva. Sandrine Salerno is the executive director of Sustainable Finance Geneva, the organiser of Building Bridges.