At the eighth meeting of its fifth session on 8 August 2014, the Intergovernmental Committee of Experts on Sustainable Development Financing adopted its report “proposing options on an effective sustainable development financing strategy to facilitate the mobilization of resources and their effective use in achieving sustainable development objectives”, as mandated by the Rio+20 outcome document.
The report develops an analytical framework for financing sustainable development, proposes a basket of policy options for countries to choose, and suggests areas for advancement of the global partnership for sustainable development.
It builds on the Monterrey Consensus with its emphasis on using all financing sources – public, private, domestic and international, and adds important new elements. The report incorporates global challenges, such as combatting climate change, into the conceptual framework. It addresses the economic, social and environmental dimensions of sustainable development in an integrated manner. In addition, by treating different financing sources as complements, not substitutes, and by analysing the underlying mandates and incentives of different financial intermediaries, it sheds light on how to design new policies to incentivize investments in the three dimensions of sustainable development.
The report finds that financing needs for sustainable development are large, but that global savings would be sufficient to meet these needs. However, current financing and investment patterns will not deliver sustainable development. While there is no one simple policy solution, a concerted effort that draws on all actors and mobilizes all resources in an integrated manner will allow to finance the investments necessary to achieve sustainable development for all.
The Committee’s strategic approach for financing sustainable development derives from a flow of funds analysis from sources to uses. It is built on nine key precepts, including: national country ownership of sustainable development financing strategies; the importance of using all financing sources in a holistic and efficient manner, with effective government policies and support as the linchpin of financing strategies; and the mainstreaming of sustainable development criteria in financing strategies and implementation approaches.
This non-prescriptive strategic approach underpins a toolkit of policy options and financial instruments, including for strengthened domestic resource mobilization, better regulation and management of financial flows, and mechanisms for blending resources that are both fair and efficient. The analysis suggests how diverse types of finance can be integrated into coherent and appropriate packages, in the context of cohesive national sustainable development strategies. In addition, international public finance will continue to be critically important. One of the many recommendations is that the level of concessionality of aid flows be matched with the type of investment and level of development of a country.
Finally, the report stresses the importance of a revitalized global partnership for sustainable development and suggests areas for action, including in global economic governance, trade, investment, the international financial system, taxation, debt, regional cooperation, monitoring and accounting and effective development cooperation.
The reports of the Intergovernmental Committee of Experts on Sustainable Development Financing and of the Open Working Group on Sustainable Development Goals, as well as the synthesis report of the Secretary-General, will provide important inputs to the third International Conference on Financing for Development (13-16 July 2015, Addis Ababa, Ethiopia). The outcome of the Conference should constitute an important contribution to and support the implementation of the post-2015 development agenda.