Sustainable Finance: Reimagining the impact of SDGs

Launched by the UN Global Compact on September 18, 2023, the Forward Faster Initiative calls on business leaders everywhere to take measurable, credible, and ambitious action in nine targets across five thematic areas — Gender Equality, Climate Action, Living Wage, Water Resilience and Finance & Investment — that have the power to accelerate progress across all Sustainable Development Goals (SDGs) where the private sector can collectively make the biggest, fastest impact by 2030. This initiative seeks to accelerate progress towards the SDGs by mobilizing finance at scale and aims to unlock new opportunities for sustainable business models, foster collaboration among stakeholders, and drive impactful investments towards SDG-aligned projects.

I joined UN Global Compact Network India in 2016, a year after the adoption of the SDGs, which revitalized the agenda of sustainable development and redefined the focus on the role of the private sector in implementing them. We were a witness to a transformative approach of businesses while promoting SDG-led in which concerted efforts were made on setting ambitious goals and engaging in cross-sector partnerships, creating SDG-aligned ventures, and reporting mechanisms, focusing on contributions to environmental, social and governance issues. Now that we have crossed the mid-point on the way to Agenda 2030, the world has come to a sobering reality emerges: the world is falling short of meeting most of the Goals by 2030.

Achieving the SDGs requires significant public and private investment, especially in poor and vulnerable countries. While substantial financing is required to achieve the SDG Agenda by 2030, the 3C crisis – COVID-19, climate change, and conflict- have mounted pressure on resources to finance the SDGs. The World Bank and International Monetary Fund reported that the achievement of the 17 SDGs requires an escalation of development finance. The annual SDG financing gap for developing countries is estimated at $4.2 trillion — up from $2.5 trillion pre-pandemic[1].

The United Nations Global Compact’s Forward Faster Initiative is a rallying cry to expedite SDG progress through scalable financial mobilization. Alignment with the Ten Principles of UN Global Compact establishes a baseline of doing no harm and of business integrity, basically ensuring that companies do not undermine efforts towards the 2030 Agenda. The Forward Faster initiative will call on companies to go beyond this baseline by making additional ambitious commitments.

Companies who sign up to the initiative, will be asked to commit to nine targets in the five selected areas. The two targets of Finance & Investment of Forward Faster initiative encourage businesses to –

1. Align their investment decisions with the SDGs and set targets, track, and report on such SDG investments. and

2. Establish corporate financing strategies linked to SDG investments and performance, followed by reporting on such SDG Finance.

The targets and the proposed underlying KPIs for the Forward Faster initiative are a direct evolution of the CFO Principles[2] of the UN Global Compact CFO Coalition for the SDGs, and it pushes companies to continuously increase the proportion of SDG- aligned investments and financing with the long-term aim of maximizing corporate investments and financing that can be aligned to the SDGs.

11 accountable companies from India have already set the targets for the Forward faster and more companies are steadily aligning their business strategies with the two targets of Finance and Investment.

By adopting this framework, companies can enhance their positive impact on society, contribute to sustainable development, and drive financial growth. By encouraging all participant companies to set targets for SDG investment and finance, UNGC aims to tap into the US $17 trillion in annual corporate investments[3] and dramatically increase the volume and proportion of SDG-aligned investments and SDG-linked finance.

As global endeavours aim for a fairer, more sustainable future, India, with its sprawling economic landscape and multifaceted challenges, finds itself at a pivotal juncture, necessitating innovative financing mechanisms. In India there are essentially three strategic ways of SDG Financing: Domestic Financing, which includes all forms of government public expenditure, remains the key driver for financing the SDGs, Blended Finance, which combines public, private, and philanthropic capital to address development challenges and Green and Sustainability Bonds, where proceeds are used to finance or re-finance a combination of green and social projects or activities.

UN GCNI is making consistent endeavours to promote and encourage Indian companies to sign up to the Faster Forward Initiative and drive India’s journey towards a more sustainable and equitable future. Stay tuned to our website for more insights!

To learn more about Forward Faster please visit: https://forwardfaster.unglobalcompact.org/home.

To learn more about Finance & Investment Guide: https://info.unglobalcompact.org/forwardfaster_sdg_finance_and_investment

UN GCNI’s report on SDG Finance in India: https://globalcompact.in/wp-content/uploads/2024/02/Unlocking-SDG-Finance-in-India_Annual-Report_web-version.pdf

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[1] https://press.un.org/en/2023/sgsm21876.doc.htm

[2] https://www.cfocoalition.org/sustainable-finance-principles

[3] https://www.nasdaq.com/articles/the-$17-trillion-market-opportunity-you-cant-afford-to-miss