4 things to know about financing sustainable development

In fewer than 10 years, the world will reach a critical deadline on sustainable development.

By 2030, countries have pledged to end poverty, protect the planet and ensure that all people enjoy peace and prosperity.

This universal agenda – including 17 Sustainable Development Goals (SDGs) and 169 targets – was adopted by the United Nations’ 193 member states in 2015.

From the outset, world leaders saw that foreign aid budgets would need to be boosted with other funding sources, like private investment, to cover the cost of ambitious global goals like healthcare for all and zero hunger.

So they agreed on a new global framework for financing sustainable development.

Here’s a short explainer.

This is about how the world pays for sustainable development. Countries signed international agreements on financing for development in Monterrey, Mexico in 2002; Doha, Qatar in 2008; and in Addis Ababa, Ethiopia in 2015.

The Addis Ababa Action Agenda forged a new global framework for financing sustainable development. It contained more than 100 concrete measures, covering areas including sources of finance and cooperation on technology, trade and capacity building.

Many new initiatives were established to achieve these goals, including a re-commitment by countries to achieve a target of 0.7% of gross national income for official development assistance (ODA).

The figure has been set by the UN for countries to spend 0.7% of their gross national income on ODA. This is government aid that supports economic development and welfare in developing countries.

The spending target was first agreed in 1970, and has since been re-endorsed at high-level international aid and development conferences.

Countries in the G7 group of nations – Canada, France, Germany, Italy, Japan, the United Kingdom and the United States – accounted for 76% of ODA in 2020.

Spending to help developing countries combat COVID-19 pushed international aid to more than $160 billion in 2020, according to the Organization for Economic Co-operation and Development (OECD).

But 13 nations have also cut their aid contributions – including Australia, Greece, Italy, South Korea, Luxembourg, Portugal and the UK.

Before the pandemic, developing countries were short of $2.5 trillion a year to fund the SDGs, according to the OECD.

It warns that the impact of COVID-19 could now increase this sustainable development financing gap in developing countries by 70% – or $1.7 trillion.

In its Financing for Sustainable Development Report 2021, the UN warns that COVID-19 could lead to a lost decade for sustainable development.

Accelerating progress towards the SDGs is the central aim of the World Economic Forum’s forthcoming Sustainable Development Impact Summit 2021.

Hosted virtually alongside the United Nations General Assembly, the event, between 20-23 September, will feature working sessions, roundtables, dialogues and briefings on revitalizing economies, advancing an inclusive recovery, scaling up climate action and shaping future food systems.

“Ensuring the world exits the pandemic stronger than it entered it will only be possible if leaders work together across sectors and borders to share and deploy know-how, innovation and promising approaches and accelerate the recovery,” the Forum says.