- The Sustainable Development Goals (SDGs) are a framework for ending poverty, reducing inequality, improving health and education, tackling climate change, preserving nature and spurring economic growth.
- The private sector must play a key role in the achievement of the SDGs by placing them at the heart of their strategies and business models.
- Large investors must realize the social and environmental risks posed to their investments by not achieving the SDGs.
Large institutional investors must mobilize the private capital under their control and their capacity for innovation to achieve the SDGs.
What are the Sustainable Development Goals are and what is their impact on the Canadian economy?
At the heart of the 2030 Agenda for Sustainable Development, the Sustainable Development Goals (SDGs) represent a real effort by the international community to create a better a world for all by 2030.
Recognizing that economic opportunities have not benefited everyone equally, the Agenda pledges to leave no one behind. It also recognizes that ending poverty and other deprivations go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests.These goals apply to all countries, without exception. In Canada, our government embraces the universality of the 2030 Agenda and is committed to supporting the implementation of the SDGs in Canada and internationally.
“Ending poverty and other deprivations go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests.”
The SDGs represent an unparalleled opportunity for the Canadian economy. For example, Sustainable Development Goal 9 states that we must develop quality, reliable, sustainable and resilient infrastructure. By some estimates, investments in new infrastructure in urban areas alone could be greater than $50 trillion, exceeding in value all existing infrastructure in the world today and a figure over 30 times larger than Canada’s total GDP. Through our world-class engineering firms and incomparable expertise in designing and operating public private partnerships, Canada is uniquely positioned to capitalize on this enormous economic opportunity. This is arguably the single largest opportunity to secure our economic prosperity over the medium-term while diversifying our international exposure. We cannot let this opportunity slip us by.
What do you see as the private sector’s role in contributing to the UN’s SDGs?
Financing the SDGs will require about US$5 to 7 trillion in new investments each year until 2030.Governments cannot do it alone. Of course, official development assistance will remain an important part of the solution, especially to address the immediate needs of the poorest and most vulnerable, but it is not going to be enough. Even a developed country like Canada is increasingly looking to attract non-government sources of financing to bridge its own infrastructure gap and to free-up scarce public funds to provide essential social services such as social housing, public transit, disaster mitigation and women’s shelters.
Private capital, particularly institutional capital, is the one source that has the potential to reach the scale of financing required by the 2030 Agenda.Pension, private equity and insurance funds together hold more than $80 trillion in assets, or 10 times more than what’s needed each year to implement the SDGs by 2030. The private sector has the resources, capital and innovation to achieve the SDGs.
“Financing the SDGs will require about US$5 to 7 trillion in new investments each year until 2030.”
We need capital that flows faster and at scale in emerging and frontier markets. For this reason, we are also working together with partners from across the United Nations and the private sector to unlock the capital that will connect people to opportunities.
It just makes common sense. And it makes business sense, too. How can institutional investors say they are fulfilling their fiduciary duty if they do not take measures to mitigate the risk to trillions of dollars worth of their assets posed by sea level rise? Or by political instability?
“Private capital, particularly institutional capital, is the one source that has the potential to reach the scale of financing required by the 2030 Agenda.”
Infrastructure investment in particular, which represents the largest single component of the overall SDG financing gap, should be especially attractive to investorsbecause of its lower risk and stable real return profile, which matches their real liabilities.
There is a sense of urgency for capital and the private sector to better align with the SDGs. The Canadian private sector has to seize this opportunity and act with a sense of urgency. Transferring risks from taxpayers to investors is the way to go!
What is the role of the UN in mobilizing the private sector to achieve the SDGs?
This is a global challenge that will require working together with global partners. No one country can do it alone. To achieve the SDGs, we will need to create new partnerships and projects that transcend usual boundaries. Finding ways of channeling a greater percentage of the pool of institutional capital towards achieving the SDGs has thus become a personal passion of mine.
In 2016, we launched the Group of Friends of SDG financing at the UN Headquarters in New York seeking to contribute to a broader paradigm shift where sustainability considerations are brought to the centre of how the private sector operates. We also work to promote the uptake of reforms by the UN to help make it better suited to engage with partnerships with the private sector. For the UN Development System to fulfill its role of supporting national implementation of the 2030 Agenda, it must develop means of accessing the resources of the private sector.
How can Canadian governments support or incentivize corporate leaders to place SDGs at the heart of their strategy, and implement them for impact?
At a high-level event hosted by the UN Secretary-General last fall, Prime Minister Trudeau made an historic announcement that Canada will contribute $20 million to the Global Infrastructure Hub (GI Hub) to establish Toronto as the centre of its North American operations. The GI Hub brings together public and private investors to develop critical infrastructure projects that benefit people, strengthen their communities, and connect global markets.
In particular, the GI Hub helps address some of the key challenges to sustainable economic growth that benefits everyone, including improving the representation of women and other marginalized groups in sustainable infrastructure; narrowing a persistent global infrastructure gap concentrated in emerging markets; and strengthening infrastructure resilience to mitigate the threats posed by climate change.
“We also launched the G7 institutional investors’ leadership initiative, which in my view, represents the most exciting development of Canada’s G7 Presidency.”
Canada also demonstrated inspiring leadership during its G7 Presidency in 2018 on bringing the world’s leading economies together to make things happen. For example, we hosted the first ever joint meeting of G7 Development and Finance Ministers where discussions focused on mobilizing private capital for sustainable development, building economic resilience against extreme weather events and women’s empowerment. This last focus lead to a historic mobilization of $3.8 billion in education for women and girls in crisis and conflict situations.
We also launched the G7 institutional investors’ leadership initiative, which in my view, represents the most exciting development of Canada’s G7 Presidency. Led by the Caisse de dépôt et placement du Québec (CDPQ) and the Ontario Teachers’ Pension Plan (OTPP), the initiative brings together major institutional investors from across G7 countries to work together to promote gender diversity in capital markets, create an infrastructure fellowship program to help develop expertise in emerging and developing economies, and take steps to better recognize and report on the financial risks associated with climate change.
Four years into the Agenda 2030, are you seeing a positive shift that makes you optimistic?
Achieving sustainable development and preventing severe climate change is imperative for securing our future economic prosperity, for ensuring the health of our planet, and for preserving global peace and security.
Over the last year and a half, there has been a marked change at the UN. Conversations on mobilizing private sources of financing for development have become far more sophisticatedand of equal stature with more traditional areas of discussion like international public cooperation and domestic resource mobilization. We see this in the increasing number of initiatives being launched by the UN Secretary-General, the Presidents of the General Assembly and by the UN Financing for Development Office related to mobilizing private sources of finance for the SDGs.
“Achieving sustainable development and preventing severe climate change is imperative for securing our future economic prosperity, for ensuring the health of our planet, and for preserving global peace and security.”
I believe that we are seeing a change on the side of the private sector as well. In fact, I believe that we are at a tipping point where institutional investors have begun realizing that the costs and risks of inaction are leaving them exposed and could jeopardize their long-term viability.
Last year, in his annual letter to the companies in which BlackRock invests, the CEO stressed that: “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
“We are at a tipping point where institutional investors have begun realizing that the costs and risks of inaction are leaving them exposed and could jeopardize their long-term viability.”
It is equally inspiring to see the new generation coming in and as the New York Times’ Nicholas Kristof put it in a column last year “Doing good is no longer a matter of writing a few checks at the end of the year, as it was for my generation; for many young people, it’s an ethos that governs where they work, shop and invest.”
That is what is driving me to commit so much effort and lead efforts to change, and it is my hope that through some of our collective efforts, we are on the verge of making significant progress. It is inspiring to work on a subject that, if we get it right, can literally transform the lives of billions and can really make the world a better place.