Journal of International Business Policy (2021) 4, 166–183
ª 2021 Academy of International Business All rights reserved 2522-0691/21
www.jibp.net
COMMENTARY
Investing in the Sustainable Development
Goals: Mobilization, channeling, and impact
James X. Zhan1 and
Amelia U. Santos-Paulino2
1
UNCTAD, Palais des Nations E10058,
1211 Geneva, Switzerland; 2 UNCTAD, Palais des
Nations E9121, 1211 Geneva, Switzerland
Correspondence:
JX Zhan, UNCTAD, Palais des Nations
E10058, 1211 Geneva, Switzerland
e-mail: james.zhan@un.org
Abstract
Global investment in the Sustainable Development Goals (SDGs) is falling short
of the target to close the $2.5 trillion annual financing gap for developing
countries. The COVID-19 shock has exacerbated existing constraints for the
SDGs and may undo the progress made in he last 6 years in SDG investment.
This poses a risk to delivering on the 2030 Agenda for Sustainable
Development. This paper assesses the global trends in both investing in and
financing the SDGs, including the myriad of financing instruments launched to
respond to the COVID-19 health crisis and its economic and social impacts. It
analyses the main challenges for mobilizing funds, channeling investment into
SDG sectors, and maximizing positive impact, as well as regulatory dilemmas in
promoting SDG investment. The article then elaborates on a set of policy
measures for accelerating investment in the SDGs, including four principles for
guiding private sector investment, mainstreaming the SDGs into national and
international investment policies and promotion strategies, harnessing financial
instruments for sustainable development, building special SDGs model zones,
and promoting better ESG standards, compliance, and reporting.
Journal of International Business Policy (2021) 4, 166–183.
https://doi.org/10.1057/s42214-020-00093-3
Keywords: SDGs; investment; sustainable finance; ESG; investment policy framework
Received: 24 November 2020
Revised: 14 December 2020
Accepted: 19 December 2020
Online publication date: 8 February 2021
INTRODUCTION
The investment requirements for the Sustainable Development
Goals (SDGs) were first assessed in UNCTAD’s World Investment
Report 2014. The report identified 10 relevant sectors1 (encompassing all 17 SDGs) and projected an annual investment gap of
$2.5 trillion in developing countries.
This projection remains valid today according to a recent review
(UNCTAD, 2020). The SDGs have significant resource implications
across developed and developing countries and require a stepchange in levels of both public and private investment in the SDGs
(Zhan, 2014).
Since the adoption of the SDGs in 2015, progress in sustainable
development investment has been observed across several SDG
sectors, including infrastructure, climate change mitigation, food
and agriculture, health, telecommunications, and ecosystems and
biodiversity. However, overall growth is falling short of requirements (UNCTAD, 2020a). The COVID-19 shock has exacerbated
Investing in the Sustainable Development Goals
James X. Zhan and Amelia U. Santos-Paulino
167
existing constraints for the SDGs and could undo
the progress made in the last six years in SDG
investment. International private sector investment flows to developing and transition economies
in sectors relevant for the SDGs are expected to fall
by about one-third in 2020 because of the COVID19 pandemic (UNCTAD, 2020e). This poses a risk to
delivering on the 2030 agenda for sustainable
development. The challenges demand targeted
fundraising and investment promotion efforts, in
tandem with a wide-ranging multilateral response
from all stakeholders to mobilize and channel the
resources towards the SDGs (United Nations
2020a, b).
In this context, this paper aims to analyze the key
trends of investment in SDGs, including the array
of financing instruments launched to respond to
the COVID-19 shock. Despite stagnant investment
in the SDG sectors, we show that the global effort to
fight the pandemic is boosting the growth of
sustainability funds, particularly social bonds. Over
the next 10 years, the ‘‘decade of delivery’’ for the
SDGs, capital markets are expected to significantly
expand the offering of sustainability-themed
instruments.
In addition to addressing investment and financing trends for the SDGs, the paper discusses challenges
for
mobilizing
funds,
channeling
investment into SDG sectors, and maximizing
positive impact, as well as the major regulatory
dilemmas in promoting SDG investment. It then
elaborates on a set of key policy measures for
accelerating investment in the SDGs, including
four principles for guiding private sector investment, mainstreaming the SDGs into national and
international investment policies and promotion
strategies, harnessing financial instruments for
sustainable development, building special SDGs
model zones, and promoting better Environmental,
Social Governance (ESG) standards, including compliance and reporting.
The rest of the paper is organized as follows.
Section two discusses trends and key issues related
to the role of the private sector’s investment in the
SDGs, and SDG financing trends in global capital
markets including in the COVID-19 context. The
third section presents key opportunities and challenges, as well as policy options for harnessing
sustainable development finance instruments. The
fourth section concludes and outlines avenues for
future policy-relevant research on international
business and development.
INVESTING IN SUSTAINABLE DEVELOPMENT
GOALS
Overall Trends in SDG Investment and Sustainable
Finance2
Private investment is crucial for achieving the
SDGs, especially given the persistent investment
gap observed in developing countries, which is now
exacerbated due to the COVID-19 pandemic.3 The
public sector remains the dominant funding and
financing source of social investment. Yet, there is
potential for additional private capital flows into
SDG sectors, provided there is greater clarity on
invested assets and project incentives. In the current global context, impact and SDG investing
open a new door for asset owners and investors.
What follows reviews the key investment trends in
developing countries across SDG-relevant sectors,
and the emerging financing trends for the goals in
global capital markets.
SDG investment trends in developing countries
UNCTAD first assessed the investment requirements for the SDGs in UNCTAD (2014) and
estimated an annual investment gap in developing
countries of $2.5 trillion across the ten relevant
sectors. The increase of investment in the SDGs in
developing countries – from all sources (domestic
and international, public, and private) – is now
evident across six out of the ten SDG sectors
(Table 1), including infrastructure (which contributes to achieving SDGs 9 and 11), telecommunications (SDG 9), food and agriculture (SDG 2),
climate change mitigation (SDG 13), ecosystems
and biodiversity (SDGs 14 and 15) and health (SDG
3). However, the order of magnitude is not yet in
the range that would make a significant impact in
estimated investment gaps - even in sectors where
investment growth is observed. In addition, investment in some essential sectors, including education
and water and sanitation, is stagnant at best.
International private investment in SDG sectors
has not reached the required levels in developing
countries. FDI, and in particular greenfield investment and project finance, have been lackluster in
relevant sectors, partly because of stagnant global
outward investment trends and partly because of
regulatory and absorptive capacity constraints in
many host countries. In general, the trends in FDI
inflows in developing economies based on balanceof-payments data largely mirrors the assessment
from the greenfield project data.
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Table 1 Summary of SDG investment trends and directional gaps (2015–2019) (all investment: domestic, international - public and
private)
Source: UNCTAD (2020)
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Figure 1 Announced greenfield FDI projects in developing economies, estimated capital spending by SDG sector ($US billions).
Source: UNCTAD (2020).
Capital spending announcements for greenfield
FDI projects (in eight SDG sectors for which data is
available) amounted to $134 billion annually on
average during 2015–2019 – an increase of 18%
from 2010–2014 (Fig. 1). However, this outcome
was largely due to heightened investment levels in
the first 2 years of the SDG framework (2015 and
2016). In the last 3 years, greenfield investment fell
back to pre-SDG levels (UNCTAD, 2020a). The
negative trend will produce an adverse impact on
SDG investment needed for supporting the recovery in the context of the pandemic. Despite fluctuations across all greenfield investment projects, the
number of renewable energy projects almost doubled over the period, contributing to the achievement of SDG 13 on climate action.
Table 2 Value and number of project finance in SDG sectors, 5-year average, 2010–2019 ($US billions and %)
Developing economies
Announced projects, average
(billions of dollars)
Total
Number of projects
Power (excluding renewable
Number of projects
Climate change mitigation
Number of projects
Transport infrastructure
Number of projects
Telecommunication
Number of projects
Water and sewerage
Number of projects
2010–2014
2015–2019
616.1
478
162.8
144
117.3
80
310.2
209
8
10
17.8
35
417.7
676
73.4
117
125.7
334
191.6
178
4.0
8
23.0
41
Of which: LDCs
Change (%)
- 32
42
- 55
- 19
7
318
- 38
- 15
- 50
- 22
29
17
Announced projects, average
(billions of dollars)
2010–2014
2015–2019
41.7
40
6.7
13
11.5
15
23
10
0.1
1
0.2
1
33.5
79
9.5
18
13
39
9.9
18
0.5
1
0.6
2
Change (%)
- 20
99
41
37
13
170
- 57
88
85
- 29
142
200
Source: UNCTAD (2020)
Includes both cross-border and domestic projects, and all public or all private projects. Climate change mitigation is estimated with data from the
renewable energy sector.
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International project finance in developing countries announced in 2015–2019 amounted to an
annual average of $418 billion, down 32 per cent
from the pre-SDG period (2010–2014). Project
finance deals comprise mostly power, transport
infrastructure, telecommunication, and water and
sanitation sectors (Table 2). The number of projects
increased by more than 40 per cent, because of
many relatively low-cost renewable energy projects.
The value of financed projects targeting LDCs
remained negligible (about $8 billion, or 6 per cent
of the total in all developing economies), and failed
to grow over the last five-year period.
Impact of COVID-19 on International Investment
in SDGs: Preliminary Assessment
The COVID-19 crisis will make the task of channeling private investment to SDG-relevant sectors
in developing countries even more daunting, and
in fact, risks undoing the progress made in the last
6 years. UNCTAD (2020d, e) shows that private
sector investment trends, which were already fluctuating as described above, are under additional
strain. As a result of the pandemic shock, in the first
three quarters of 2020, the value of newly
announced greenfield investments contracted by
40% and that of international project finance (used
for large infrastructure projects requiring multiple
investors) by 15%. Investment activity fell sharply
across all SDG sectors. In infrastructure and infrastructure industries (including utilities and telecom),
international
project
finance
announcements were 62% lower in value. Greenfield project values across food and agriculture,
water and sanitation, and health and education
were all one- to two-thirds lower than in 2019
(Table 3).
UNCTAD (2020e) further shows that the decline
in SDG-relevant investment was much larger in
developing and transition economies than in
developed countries. In developed economies,
gains in investment in renewable energy and digital
infrastructure are a first sign of the asymmetric
effect that public support packages in developed
countries will have on global SDG investment
trends. Among developing and transition economies, the impact of the pandemic is more pronounced in the poorer regions. SDG-relevant
investment fell by 51% in Africa, 44% in Latin
America and the Caribbean, 33% in Asia, and 27%
in transition economies (UNCTAD, 2020e).
SDG Financing Trends in Global Capital Markets
Capital markets that are aligned with sustainable
development can be instrumental in filling the
financing gap for the SDGs. The past decade has
witnessed a surge of sustainability-dedicated financial products in a number and types of assets.
Sustainability funds mainly target ESG- or SDGrelated themes or sectors, such as clean energy,
clean technology, sustainable agriculture, and food
security. UNCTAD (2020) estimates that funds
dedicated to investment in sustainable development have reached $1.2–$1.3 trillion today, including sustainability-themed funds, green bonds, and
social bonds. Sustainability dedicated investment
consists mostly of green bonds (nearly $260 billion), sustainability-themed equity funds (about
$900 billion) and social bonds ($50 billion), plus
COVID-19-response bonds ($55 billion) (see
Fig. 2).4 Given that almost 90% of funds and bonds
Table 3 Impact of COVID-19 on investment in the SDGS (selected trends in greenfield investment and project finance in SDG
sectors, 2020)
Infrastructure
Transport infrastructure, power
generation and distribution (except
renewables), telecommunications
Renewable energy
Installations for renewable energy
generation, all sources
- 62%
- 2/3
growth
WASH
Provision of water and sanitation
to industry and households
Food and agriculture
Investment in agriculture,
research, rural development
Health
Investment in health infrastructure,
e.g. new hospitals
- 57%
- 37%
Education
- 70%
Infrastructural investment, e.g.
new schools
- 42%
Note: Trends based on project announcement values. Project finance for infrastructure and renewable energy, greenfield investment for other sectors.
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171
55 50
260
900
Sustainability-themed funds
Green bonds
Social bonds (COVID-related)
Social bonds (other)
Figure 2 Sustainability-dedicated investment by instrument ($US billions). Source: Authors’ elaboration based on UNCTAD (2020).
are concentrated in developed countries, sustainability financing largely bypasses developing countries, in particular the least developed countries
(LDCs).
The current global efforts to fight the pandemic
are boosting the growth of sustainability financing,
particularly in social bonds (Fig. 2). This is being
driven by COVID-19-related bonds, which have
been rapidly deployed to fund crisis relief and
recovery. Stock exchanges are facilitating the fastgrowing market in COVID-19-response bonds and
assisting listed companies, especially small and
medium enterprises (SMEs), by providing fee relief
and introducing flexibility in rules.
Sustainability-themed funds include mutual funds
and exchange-traded funds that use ESG criteria as
part of their security selection process or seek a
measurable positive impact alongside financial
returns. Currently, according to UNCTAD’s estimates, there are close to 3100 such funds worldwide, with assets under management of about $900
billion, mostly in developed economies. However,
while sustainability-themed funds are valued at
about three times various types of ESG bonds in
Fig. 2. This does not make them more important for
the SDGs. Bonds are securities created in the
primary market, in this case for specific sustainability purposes. ESG funds contribute indirectly to
the SDGs: as part of the secondary market in which
existing securities are traded, they increase demand
for shares of companies that pass various ESG/sustainability criteria.
From 2010 to 2019, the number of sustainabilitythemed funds in Europe and the United States, the
two largest markets for sustainable investment, rose
from 1304 to 2708, with assets under management
growing from $195 billion to $813 billion. Such
funds in developing economies remain a relatively
new phenomenon. In China, there are 95 sustainability-themed funds, with assets under management of nearly $7 billion as of 2019. Most were
created in the last 5 years. ESG funds have also
experienced growing traction in Brazil, Singapore,
and South Africa in recent years, albeit from a low
starting level.
SDG-dedicated bonds are instruments targeted to
address several SDGs, with the overall aim to
contribute to poverty reduction and equality (see
Table 4). Although green and social bonds (COVIDrelated and other categories) are commonly directed towards the enviroment and climate change—
including affordable, reliable, sustainable and modern energy for all (SDG 7), they also target industry,
innovation and infrastructure (SDG 9), sustainable
cities and communities (SDG 11), responsible consumption and production (SDG 12), and promoting
investment in climate action (SDG 13). More
recently, they are being oriented towards postpandemic recovery, including sustainability bonds
issued in accordance with the global sustainability
bond principles and framework.
Green bonds are one of the foremost innovations
in sustainable finance, promoting investment in
climate action (SDG 13), affordable and clean
energy (SDG 7), and sustainable cities and
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Table 4 Links between SDGs and social and sustainable investment criteria
SDG
Goal
Social bond principal category
Green bond principal category
1
No poverty
Climate change adaptation
3
Health
3
6
9
Health
Clean water and sanitation
Industry, innovation, and
infrastructure
Sustainable cities and
communities
Sustainable cities and
communities
Biodiversity and ecosystems
Socioeconomic advancement and
empowerment
Hospital construction and health
impact
COVID response and immunization
Affordable basic infrastructure
Affordable basic infrastructure
Affordable basic infrastructure
Clean transport
Socioeconomic advancement and
empowerment
Socioeconomic advancement and
empowerment
Sustainable water, and wastewater management
11
11
15
Sustainable construction and retrofitting of health facilities
N/A
Sustainable water and wastewater management
Renewable energy
Environmentally sustainable management of living natural
resources and land use
Source: authors’ elaboration based on ICMA (2020) and UNCTAD (a).
300
140.0 Bn
250
120.0 Bn
200
100.0 Bn
150
80.0 Bn
100
60.0 Bn
50
40.0 Bn
0
2014
Energy
Water
2015
2016
Buildings
Waste
2017
2018
2019
Transport
Land Use
Figure 3 Green bond market size and sectors financed, 2014–
2019 ($US billions) Source: Authors’ elaboration, with data from
Climate Bonds Initiative (2020).
communities (SDG 11). The global green bond
market grew rapidly in 2019, to nearly $260 billion
- an annual 51% increase. They are primarily used
in three sectors (energy, building, and transport),
which experienced significant growth annually
from 2014 (Fig. 3). However, the green bonds
market’s size varies by region (Fig. 4). While the
market for green bonds is growing rapidly in
Europe and Asia Pacific, and maturing in North
America, it is in its infancy in Latin America and
the Caribbean, and Africa.5
Social bonds have expanded significantly this
year, as a result of the global efforts to fight the
COVID-19 pandemic. In the first quarter of 2020,
social bonds related to COVID-19 crisis relief
raised $55 billion, exceeding the total value of
social bonds issued in 2019. Stock exchanges
actively support the fast-growing COVID-19-
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20.0 Bn
0.0 Bn
Supranaonal
2015
Europe
2016
North America Asia-Pacific
2017
2018
LAC
2019
Figure 4 Green bond market size by region, 2014–2019 ($US
billions). Source: Authors’ elaboration, with data from Climate
Bonds Initiative (2020).
response bond market, for example by waiving
listing fees. Financing instruments to assist with
the recovery from COVID-19 have been issued by a
range of investors, including the private sector and
sovereign, supranational, and agency actors
(SSAs). Two different types of COVID-themed
bonds have been issued:
• General-purpose bonds (or ordinary operation
bonds), as part of a broader COVID-19 response
plan by the issuer; and
• Use-of-proceeds bonds, which can be issued
under a framework that is aligned with the
International Capital Market Association’s
(ICMA) Green, Social and Sustainability bonds
principles and guidelines (GSSBP) – or a specific
COVID-19-response framework (see Table 4).
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James X. Zhan and Amelia U. Santos-Paulino
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Use-of-proceeds bonds are relevant for both the
post-pandemic recovery and for alleviating the
immediate human costs. These types of bonds have
largely been issued by SSAs, including central banks
and treasuries, as well as social and impact
investors. For instance, the Inter-American Development Bank’s sustainable development bond
launched a $4.25 billion 3-years sustainable development bond (SDB) – its largest-ever public bond
issuance. Proceeds were used to tackle the unemployment effects. Other interventions include the
African Development Bank’s $3 billion ‘‘Fight
COVID-19’’ Social Bond; and the World Bank’s
record $8 billion from global investors in support of
its member states.6
In Europe, COVID-19-response bonds have been
proposed in various formats to help countries keep
borrowing costs low during the crisis, including
reframing green bonds to ensure that the postpandemic economic reconstruction supports the
carbon neutrality targets of the EU’s Green Deal. In
Asia, Kookmin Bank issued the first Korean COVID19-response bond (a $500 million social bond) in
April 2020. Companies in China have issued more
than $2 billion in virus-control bonds, with a third
of the funds going towards mitigating the effects of
the pandemic.
Over the next 10 years, the ‘‘decade of delivery’’
for the SDGs, capital markets can be expected to
significantly expand their offering of sustainabilitythemed products. Going forward, the challenge will
be how to combine growth with a greater focus on
channeling funds to SDG-relevant investments in
developing countries, especially LDCs, and generate sustainable development impact. To date, most
of the assets of sustainability-themed funds are
invested in developed countries.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
(ESG) INTEGRATION
The Role of Stock Exchanges and Regulators
In addition to SDG investment and financing, integrating good environmental, social, and governance
(ESG) practices in business operations to ensure
positive investment impact plays a critical role in
achieving the 2030 Agenda for Sustainable Development. Global capital markets are instrumental in this
process. More than half of exchanges worldwide now
provide guidance to listed companies on sustainability reporting. Security regulators and policymakers, as
well as international organizations, such as the UN
120
100
53,000
$90
trillion
market
cap
80
60
94
97
2019
2020
Q3
81
62
68
49
40
20
6
9
2012
2013
18
0
2014
2015
2016
2017
2018
Figure 5 UNCTAD Sustainable Stock Exchanges Initiative
Membership (number). Source: Authors’ elaboration based on
UNCTAD (2020).
Sustainable Stock Exchanges initiative and the International Organization of Securities Commissions
(IOSCO), have contributed to expanding ESG integration in business practices.
Stock exchanges provide a platform for sustainable finance and guidance for corporate governance. With the adoption of the UN 2030 agenda,
capital markets have an internationally agreed
framework for contributing to the creation of
sustainable markets and a sustainable society.
Increasingly, companies and institutional investors
acknowledge the need to align investment and
business decisions with positive development outcomes. The SDGs are thus increasingly becoming a
focus of investor interest and company reporting
for impact, including on gender equality. ESG
reporting is now a mainstream expectation of
markets, and a rapid transition has been observed
in the last 10 years (see Fig. 5). A major challenge,
however, is the quality of disclosure and harmonization of reporting standards.
According to the United Nations Sustainable
Stock Exchanges (SSE) initiative, which reports the
sustainability activities and mechanisms of 102
stock exchanges around the world, the last decade
has witnessed a substantial increase across a range
of sustainability mechanisms undertaken by
exchanges (UNSSE, 2019). Such mechanisms and
activities encompass sustainability reporting, training, and regulations as well as the development of
relevant tools and platforms for the development
and transaction of sustainability-themed financial
products (Fig. 6).
Training on ESG remains the most relevant
activity, with over half of the stock exchanges
offering at least one training course or workshop.
Exchanges also promote ESG disclosure (SDG 12.6),
where half of the SSE members (48) currently
publishes guidance on disclosing ESG information.
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Figure 6 Key indicators from the Sustainable Stock Exchanges Initiative Source: UNCTAD (2020).
The number of stock exchanges with sustainability
bond segments, primarily green bonds (SDG 13),
expanded significantly since the launch of the
SDGs to a total of 31 in 2019. Importantly, the
number of exchanges covered by mandatory rules
on ESG disclosure (SDG 12.6), currently 24, has
more than doubled in the past 5 years.
In addition to sustainability standards, one SDG
on which companies are increasingly expected to
report is gender equality. About 70% of the world’s
5000 largest MNEs now report on progress in this
area (UNCTAD, 2020b). Overall, women’s representation remains unequal. Regulation and investor
pressure have led to better representation at the
board level, but not at managerial levels. The
implementation of gender-equality policies related
to flexible work and childcare remains weak.7
UNCTAD’s analysis shows that globally about 80%
of companies have published a diversity policy.8
SDG Integration and Sustainability Reporting
The SDGs have become the universally accepted
benchmark for sustainability impact and are
increasingly integrated into corporate sustainability policies and reporting. While environmental
and social governance reporting has hitherto been
a voluntary and a supplementary activity to core
business practices, the realization of the SDGs will
depend on a transition towards full ESG compliance (Kolk et al., 1999, 2020). ESG initiatives in the
private and public sectors have been aligned with
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the SDGs, by mapping and integrating the goals
across organizations and industries. Mapping the
SDGs to the work of an organization is one of the
most common ways in which the SDGs have been
integrated into sustainable corporate behavior. The
initiatives have been integrated into company and
organizational road maps, missions, pathways, and
codes of conduct. For instance, the Ethical Trading
Initiative, Transparency International, and the
International World Cocoa Foundation, have used
all or selected SDGs to frame their visions and
missions (UNCTAD, 2020).
Progress in reporting by MNEs will aid in boosting the private sector’s contribution to the SDGs.
The Global Reporting Initiative, which produces
the world’s most widely adopted sustainability
reporting standard, charted the SDGs to its reporting standard in the SDG Compass, and provides an
inventory that maps business indicators to SDG
targets. It has also published three SDG reporting
tools to help companies incorporate SDG reporting
into their practices, as well as recommendations for
national policymakers on using corporate reporting
to strengthen the SDGs.9
ACCELERATING INVESTMENT IN THE SDGS:
KEY CHALLENGES AND POLICY RESPONSES
International business research has contributed to
the understanding of the private sector’s role in the
SDGs framework, also helping to better inform
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policy-making.10 Evidence-based policy-making,
that is, policy decisions effectively informed by
scientific research, is fundamental for assessing the
impact of businesses activities on sustainable development. However, the SDG framework is defined
by complex and interrelated issues, including the
involvement of multiple actors at multiple levels
across numerous countries (van Tulder 2018, van
Tulder and Keen, 2018, Eden and Wagstaff, 2020).
On this basis, academic research can provide policymakers frameworks to assess the growing challenges to meet the SDGs, and possibly provide
solutions to those challenges.
Linkages between Policy and Practice
Despite the policy relevance and the increase in
SDG reporting initiatives among private agents,
research on the role of the private sector in
achieving international policy goals, including the
SDGs, is still limited. For example, van Zanten and
van Tulder (2018) outline a plan and put forward
policy recommendations for a more proactive
engagement of MNEs in sustainable development.
Based on a survey from European and North
American Financial Times Global 500 companies,
the study indicates that MNEs engage more with
SDG targets and goals that are actionable within
their own value chain operations. Differences in
SDG engagement based on MNEs’ home- and hostcountry standards were also found to be significant
determinants of engagement. However, not all
actors are equably prepared to contribute to all
aspects and perform across all areas of the SDG
agenda. Therefore, there is the need for a comprehensive and forward-looking policy framework
comprising an investment-chain approach from
upstream to downstream.
In designing investment policy frameworks, it is
crucial to consider the complementarity and limited substitutability between public and private
resources for development (Schmidt-Traub and
Sachs 2015). Public investment is a driver of
economic growth, where policies that promote
public investment can deliver high returns in terms
of economic development. At the same time, the
benefits of private investment and ample opportunities from the private sector are well recognized.
The private sector has evident advantages to deliver
on the SDGs beyond investment, including innovation, responsiveness, efficiency, and provision of
specific skills and resources. Private investment,
and private sector-led initiatives, such as research
and development partnerships, knowledge-sharing
platforms, technology and skills transfer, and
infrastructure investment have the potential to
kick-start development, can lead to productivity
gains, generate better quality jobs, strengthen skills
and promote technological advances, and thus
achieve sustainable development (Zhan and Karl,
2016). Moreover, by promoting sustainable development through incentive programs, governments
could improve the viability of vital investments
(such as in electricity, water supply, health and
education services), making those services more
accessible and affordable for the poor, and the
jurisdiction a more attractive investment
destination.
Despite the expectations on the private sector to
deliver more sustainable and responsible practices,
there are several barriers and challenges. The challenges are often magnified by the tension between
the dominant business model, which is based on
short-term planning with a narrow focus on
finances, and a tangential agenda of longer-term
planning with economic, social, and environmental goals (Scheyvens et al., 2016). Zhan and Karl
(2016) argue that incentives are a key policy tool for
promoting investment in sustainable development.
The study advocates for the redesign of investment
incentive schemes, reorienting them from a location-based to a sustainable-development based system to attract investment in SDG-relevant sectors
and to achieve sustainable development outcomes.
Investment incentives are, however, only one element of a sustainable development-oriented policy
strategy and guiding framework. Such a policy
needs to address the foremost constraints that
investment in SDG-related sectors and industries
may encounter.
To address these challenges, governments would
need to employ a wide range of policy options.
Moreover, the scale of the investment needs would
mandate an internationally collaborative effort
that prompts synergies amongst all stakeholders,
especially between developed and developing
countries. Following its pioneering research on
estimating SDG investment needs, UNCTAD has
been carrying out research on developing a holistic
policy package to help governments meet SDG
investment needs11.
Policy Challenges and Dilemmas
Policy actions for promoting private investment in
SDGs need to address three main challenges.
Firstly, challenges to mobilizing funds in financial
markets include market failures and a lack of a
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sound system for corporate disclosure of environmental, social, and governance performance, misaligned incentives for market participants, and
start-up and scaling problems for innovative
financing solutions. Secondly, hurdles to channeling
funds into SDG sectors include entry barriers, inadequate risk-return ratios for SDG investments, a
lack of information and effective packaging and
promotion of pipeline bankable projects, and a lack
of investor expertise. Thirdly, challenges in maximizing the positive impact and minimizing the risks
and drawbacks of private investment in SDG sectors
including persistent weak absorptive capacity in
some developing countries, social and environmental impact risks, and the need for stakeholder
engagement and effective impact monitoring.
Increasing the involvement of private investors
in SDG-related sectors, many of which are sensitive
or of a public service nature, leads to three policy
dilemmas, which entail regulatory and public policy concerns. The first dilemma relates to the risks
involved in increased private sector participation in
sensitive sectors. Private sector provisions in social
sectors such as health care and education in
developing countries, for instance, can have negative effects on standards unless strong governance
and oversight is in place, which in turn requires
capable institutions and technical competencies.
Private sector involvement in essential infrastructure industries, such as power or telecommunications, can be sensitive in developing countries
where this implies the transfer of public sector
assets to the private sector. Moreover, business
operations in infrastructure such as water and
sanitation are of particular concern due to the
basic-needs nature of these sectors.
The second dilemma stems from the need to
maintain quality services, affordable and accessible
to all. The fundamental hurdle for increased private
sector contributions to investment in SDG sectors is
the inadequate risk-return profile of many such
investments. Many mechanisms exist to improve
the risk-return profile for private sector investors.
Increasing returns, however, must not lead to the
services provided by private investors ultimately
becoming inaccessible or unaffordable for the
poorest in society. Allowing energy or water suppliers to cover only economically attractive urban
areas while ignoring rural needs, or to raise prices of
essential services, is not a sustainable outcome.
A third dilemma results from the respective roles
of public and private investment. Public and
private investment are critical for achieving the
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prospective SDGs - the latter is expected to complement, not replace, the former. Governments –
through policy and rulemaking – need to be
ultimately accountable with respect to provision
of vital public services and overall sustainable
development strategy. Given the complex and
multifaceted challenges faced by investors and
countries, which are heightened due to COVID19, achieving the SDGs will require comprehensive
investment policies. In this context, governments
need to strike a balance between public and private
investments.
Policy Framework for Sustainable Development
UNCTAD’s Investment Policy Framework for Sustainable Development (IPFSD), a holistic strategic
framework and an action Plan, aims at providing
guidance, mobilizing and channeling funds into
SDG sectors, and maximizing their impact (Zhan,
2016). The IPFSD remains a valid point of departure
to address private sector investment and enhancing
policies to support SDG impact, and to address the
challenges and dilemmas discussed in the previous
section. The framework provides concrete recommendations for the advancement of investment for
the implementation of the 2030 Agenda in the
different areas outlined, including the highly
uncertain investment outlook, which depends on
the duration of the health crisis, and on the
effectiveness of policy interventions to mitigate
the economic effects of the pandemic.
The framework suggests four guiding principles
for private sector investment in the SDGs.
First, balancing liberalization with regulation. SDG
sectors often, given their nature, provide public
goods and frontline services; private sector involvement requires careful balancing of market access
considerations with appropriate public regulations
and possible oversights.
Second, balancing the need for attractive risk-return
rates with the need for accessible and affordable services
for all. The risks undertaken by corporate actors and
their expected returns need to be weighed against
the requirement to ensure the accessibility and
affordability of goods and services.
Third, balancing a push for private investment with
public investment. Private sector involvement is not
a panacea for solving the SDG financing problem
but can play an important role in complementing
and supporting public sector engagement. Mobilizing private and public funding must follow a
coherent strategy.
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Fourth, balancing the global scope of the SDGs with
the need to make a special effort in least developed
countries (LDCs) and other vulnerable economies.12
The persistent development challenges in such
countries requires national and international measures tailored to their specific contexts.
UNCTAD’s policy framework and related action
plan provide a range of policy options to respond to
the investment mobilization, channeling and
impact challenges, faced especially by developing
countries. The key policy options, which should be
followed simultaneously with changing the global
business mindset, are discussed below.
Mainstreaming the SDGs in investment policies
Today, more than 150 countries have adopted
national strategies on sustainable development or
revised existing development plans to reflect the
SDGs. For instance, national sustainable development strategies – which comprise the broad set of
national sectoral economic and social strategies –
often highlight the need for additional financial
resources and a lack of domestic capacity to meet
the SDGs. However, concrete action plans for
attracting more investment in the SDGs are vague
or non-existent. Research by UNCTAD, based on
128 voluntary national reviews, reveals that
although many of these strategies highlight the
need for additional financial resources, very few
contain concrete roadmaps for the promotion of
investment in the SDGs (UNCTAD, 2020a).
Existing investment promotion instruments
applicable to the SDGs are limited in number and
follow a piecemeal approach. UNCTAD’s global
review of national investment policy regimes shows
that less than half of UN member states hold
specific promotion tools for investment in the
SDGs. Each country, on average, targets no more
than three SDG-related sectors or activities in its
regulatory framework. Many developing countries,
however, do not have any such policy instruments
in place. Countries promote inward investment in
the SDGs primarily through targeted incentive
schemes. Several key SDG sectors, such as health,
water and sanitation, education and climate
change adaptation, are rarely covered by specific
investment promotion measures. Developed
economies also promote outward investment
through state guarantees and loans applying sustainability criteria.
Since the adoption of the SDGs, efforts have been
made to enhance promotion of investment in SDG
sectors. In total, 55 countries implemented almost
200 policy measures related to these sectors, with
most of them aiming at liberalizing or facilitating
investment. Most policy changes affected food and
agriculture, transportation or innovation and were
adopted by developing economies, with developing
Asia alone responsible for 42% of them. The
pandemic has triggered a shift in priorities towards
more promotion of investment in the health sector,
food security, and digitalization. Since September
2015, close to 50 regulatory amendments aimed at
tightening existing foreign investment regimes
applicable to SDG sectors (e.g., in telecommunication, power, as well as food and agriculture) became
effective, most of them relating to foreign investment screening mechanisms.
In addition to national investment policies,
factoring in the SDGs in international investment
treaties presents a daunting task. The majority of
the 3300 existing treaties pre-date the SDGs, a large
number of which contain provisions inconsistent
with the SDGs. Since the adoption of the SDGs in
2015, 190 new international investment agreements (IIAs) have been concluded. Of those, only
30% contain provisions addressing the SDGs
directly.
In light of the above, a more systemic approach is
needed to mainstream SDGs into the national
investment policy framework and international
investment treaty regime. At the national level, a
coherent and comprehensive road map for attracting investment into SDG sectors and ensuring it
contributes to sustainable development should be
an integral part of national strategies and development plans based on the Investment Policy Framework for Sustainable Development (UNCTAD,
2015). At the international level, the SDGs should
be a core objective when negotiating new IIAs and
modernizing ‘‘old-generation’’ treaties, based on
UNCTAD’s IIA Reform Package (UNCTAD, 2018).
Harnessing sustainable development finance
instruments
As indicated in the ‘‘Investing in Sustainable
Development Goals’’ section above, a significant
growth in sustainable development finance instruments has been observed in recent years. Yet most
of these funds circulate within developed economies, especially in the context of climate change
mitigation and renewable energy. Over the next
decade, capital markets are expected to significantly expand their offering of sustainabilitythemed products. The challenge will be how to
combine growth with a greater focus on channeling
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funds to SDG-relevant investment projects in
developing countries. In this context, there is a
need for better policy coordination at the international level to channel sustainable development
finance resources to developing economies, particularly to LDCs.
There are two critical bottlenecks that inhibit
flows of funds to developing economies. Firstly,
barriers to outflows of sustainable investment funds
from major home economies. Secondly, there are
considerable barriers to inflows in developing
economies. Regarding the former, the key issue is
that prudential responsibility of funds in developed
economies and risk perception with investing in
developing countries. To overcome this challenge,
sovereign guarantees and support from developed
economies can be instrumental in facilitating the
outflow of sustainable investment funds to developing economies.13
Moreover, there is often a lack of clarity on
investment policy in host economies, concerns
about regulations, and a dearth of investable projects. In all of these areas, governments in developing economies need to adopt a holistic and
comprehensive policy framework that is conducive
to the inflow of sustainable investment resources,
offers investors protection, and is transparent.
Using performance indicators linked to sustainable
finance instruments is one of the tools that could
help developing countries to attract sustainable
financing.
Policymakers in both developed and developing
countries could look to replicate the successful
models of green finance found in green bond
markets. This includes developing sovereign green
bonds as well as encouraging private enterprises to
issue green bonds to fund climate adaptation and
mitigation efforts. This is particularly critical for
regions such as Latin America and the Caribbean,
and Africa, where the need to transition to sustainable economic models is the largest, and which face
the highest costs due to climate change.
COVID-19 bonds
Recently, COVID-19-themed bonds have played a
key role in helping alleviate the immediate human
and economic costs of the pandemic, also contributing to the long-term recovery. The instruments to respond to the pandemic have increased
the market size, and are likely to increase prevalence of social bonds compared to green bonds in
the short term, as well as to enhance the adaptation
of different responsible investment practices across
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a wide array of financial products. Market size may
also increase due to COVID-19, as various stakeholders try to leverage additional sources of financing to contend the impact of the pandemic.
As discussed in the ‘‘Investing in Sustainable
Development Goals’’ section, an increasing number
of countries and supranational institutions are
already rolling out such bonds. However, to optimize the benefits from such instruments and
ensure that they do not create unsustainable levels
of debt in the long run, stakeholders should adopt a
tiered, strategic, and evidence-based approach pivoted around transparency, good governance, and
robust impact-assessment mechanisms.
Another policy issue is linking the COVID-19
bonds strategic vision with long-term goals following a needs-based assessment. Many countries have
immediate needs related to healthcare and social
protection due to the pandemic, but it is critical
that raising financial resources and spending plans
correspond to long-term development objectives.
For example, a given country’s additional spending
on healthcare should consider addressing immediate needs and structural shortcomings of health
systems, especially in developing countries (Zhan
and Spennemann 2020).
Similarly, with regard to the loss of employment
and increasing poverty rates due to the economic
shock of the pandemic, investment should address
both immediate social protection needs especially
of the most vulnerable population groups and at
the same time lay the foundation for structural
transformation of economies to enhance employment-generating local production in a way that
capitalizes on the changing global production
landscape. For instance, UNCTAD’s World Investment Report 2020 highlights how GVCs are transforming due to both the pandemic as well as
existing megatrends of technology, retrenchment
in global governance, and the sustainability
imperative.
Transformation will also depend on sustainability concerns, including differences between countries and regions on emission targets, ESG
standards, market-driven changes in products and
processes, and supply chain resilience measures.
Adapting to these shifts in international production patterns presents new challenges for developing countries. The main challenges in the new era
of international production involve increased
divestment, relocations, investment diversion,
and a shrinking pool of efficiency-seeking investment, implying tougher competition for FDI.
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James X. Zhan and Amelia U. Santos-Paulino
179
Changes in the locational determinants of investment will negatively affect developing countries’
ability to attract MNE operations. In contrast, new
opportunities are likely to arise due to investors
looking to diversify supply bases to enhance production resilience.
The other consideration for policymakers to
make COVID bonds successful is to ensure robust
and real-time impact measurement using an evidence-based approach. This could allow for higher
transparency and good governance mechanisms for
COVID bonds, an issue that is critical for both the
intended beneficiaries and investors. One instrument that could contribute towards greater transparency and impact is the use of sustainabilitylinked bonds (SLB) adapted to COVID recovery. SLB
bonds are ‘‘any type of bond instrument for which
the financial and/or structural characteristics can
vary depending on whether the issuer achieves
predefined Sustainability/ESG objectives’’ (ICMA,
2020, page 2). COVID-19-linked SLBs can be instrumental in incentivizing the achievement of SDGrelated outcomes, such as ensuring access to vaccines, enhancing medical services, and widening the
social protection net.
Building SDG model zones
Fostering new forms of partnerships is one of the
key policy options for mobilizing investment in the
SDGs. Today there are over 5400 special economic
zone across 147 economies, and more than 500
new zones are in the pipeline (UNCTAD, 2019b).
Booming SEZs result from a new wave of industrial
policies and a response to increasing competition
for internationally mobile investment. There is
significant opportunity and potential for existing
zones to transition into SDG model zones, and to
build the new generation of zones following a
sustainable development blueprint. Such zones
would aim to attract investment in SDG-relevant
activities, adopt the highest levels of ESG standards
and compliance, and promote inclusive growth
through linkages and spillovers (Zhan et al, 2020).
SDG model zones could act as catalysts to transform the ‘‘race to the bottom’’ for the attraction of
investment (through lower taxes, fewer rules, and
lower standards) into a race to the top – making
sustainable development impact a locational
advantage (Zhan, 2017).
The process of modernizing zones and building
SDG Model Zones can benefit from a global
exchange of experience and good practices. Also,
with more zones being developed through
international partnerships, a global platform that
brings together financing partners, SEZ developers,
host countries, investment promotion agencies and
outward investment promotion agencies, as well as
impact investors, can accelerate the transition
towards sustainable development-oriented zones.
The objective should be to make SEZs work for the
SDGs: from privileged enclaves to sources of widespread benefits. SDG model zones could help to
address existing supply-side constraints, particularly in LDCs.
Promoting better ESG standards, compliance,
and reporting
Progress on investing in the SDGs is not only
related to mobilizing funds and channeling them
to priority sectors in developing economies, especially in structurally vulnerable countries. It also
entails integrating good environmental, social, and
governance (ESG) practices in business operations
to ensure positive investment impact. As discussed
in the second section, there is a close link between
SDGs and ESGs reporting standards, relating to
business conduct, the economic, social, and governance factors, as well as the overall global socioeconomic and environmental impacts the SDGs
entail. Even if the SDGs agenda has shaped the
global discourse on corporate sustainability, such
initiatives must now reinforce the implementation
and measurement of the contributions to the SDGs,
which must be supported by comprehensive
reporting.
With rapid advancement in stock exchanges’
sustainability practices, policymakers need to provide written guidance on ESG disclosure, and
should seek to formalize such guidance in mandatory listing regulations. Countries with ESG listings
as a voluntary requirement should also consider
shifting to a mandatory regulatory requirement. In
this regard, the UN Sustainable Stock Exchange
Initiative has been instrumental over the past
decade, leading the movement of mainstreaming
ESG into the global capital markets, and through
the exchanges worldwide into the business practices and disclosure of listing companies from both
developed and developing countries (UN SSE,
2019). Institutions such as IOSCO could assist
developing countries to establish guidance for
security market regulators on consistent mandatory
ESG disclosure rules. Given the diverse reporting
capacities and standards, particularly among developing countries, innovative initiatives should be
pursued, including enhancing the capacities of
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small and medium enterprises, and promoting
sustainability indicators for new actors such as
family businesses.
Bringing small and medium enterprises (SMEs)
on board for ESG compliance and reporting
Small and medium enterprises (SMEs) represent a
major share of economic activity in developing
countries. Bringing SMEs on board regarding the
adherence of ESG compliance and reporting standards can enhance their role in the pursuit of the
SDGs. However, SMEs in developing countries
often have limited capacity and expertise for
reporting on ESG standards and there are often no
institutional guidelines or requirements for such
reporting. In difficult economic conditions for
SMEs due to the pandemic, the making of such
reporting mandatory may also increase the costs of
operation.
In this context, viable solutions and support for
SMEs’ reporting should be explored, including by
relaxing mandatory reporting requirements at the
firm level. Given existing constraints in developing
countries, SME industry associations that compile
joint reporting on behalf of all members could be a
solution. These industry associations can be set up
by governments or the private sector themselves, or
as public–private partnerships. Intermediate professional firms that specialize in sustainable development reporting could act as intermediates in both
collecting data and information while also helping
SMEs enhance capacity for better ESG reporting and
compliance. Governments could provide an
enabling environment for such associations to
function and model the overall regulatory framework to their specific contexts.
SMEs and governments can also benefit from the
advisory and capacity-building services of the UN
Intergovernmental Working Group of Experts on
International Standards of Accounting and Reporting (ISAR) to improve reporting standards. ISAR is
the United Nations’ focal point on accounting and
corporate governance matters. UNCTAD serves as
ISAR’s secretariat, providing substantive and
administrative inputs to its activities. ISAR reviews
developments in the field of international reporting and promotes best practices for corporate
governance. Within the context of Agenda 2030,
ISAR contributes to the realization of the Sustainable Development Goals (SDGs) through enhanced
transparency and sustainability standards for
companies.
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Sustainable development initiative for family
businesses
Family businesses also have a role in advancing the
agenda on better reporting and adherence to ESG
standards. UNCTAD and The Family Business Network (FBN) jointly established the Global Initiative
Family Business for Sustainable Development (FBSD)
[fbsd.unctad.org], a novel partnership between the
United Nations and the global family business
community. The network aims at mobilizing business families and their firms to embed sustainability into their business models and strategies, and
commit to concrete, measurable contributions
towards the SDGs. Key components of the FBSD
Initiative include, among others, the family business sustainability pledge and the adoption of
transparent and comparable core sustainability
indicators for family firm reporting.14
The Sustainability Indicators for Family Business
(SIFB) build on UNCTAD’s Guidance on core indicators (GCI) for entity reporting on contribution towards
the implementation of the SDGs. The core indicators
were developed through consultations and consensus-building among key experts and endorsed
by UNCTAD’s Intergovernmental Working Group
of Experts on International Standards of Accounting and Reporting (ISAR). The 33 core indicators
outline the base-line reporting companies are
required to provide, to enable governments and
other stakeholders to evaluate the contribution of
the private sector to the implementation of the
SDGs.
In addition to the reporting framework of the
core indicators, FBN elaborated further disclosure
elements to capture and recognize family business’
efforts in contributing to the implementation of
SDGs. In total, SIFB covers approximately 40 indicators mapped to ten different SDGs. The reporting
framework will be periodically reviewed in view of
its applicability for family firm entities. Family
businesses can take advantage of this resource and
join the growing network of family businesses that
have aligned their operations with sustainable
development to varying degrees and through different channels.
CONCLUSION
This paper discusses the trends in SDG investment,
and the significant investment gaps that threaten
progress towards the SDGs. The article assesses the
array of financing instruments launched to respond
to the COVID-19 health crisis and its economic and
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James X. Zhan and Amelia U. Santos-Paulino
181
social impacts. The COVID-19 pandemic is significantly exacerbating SDG financing gaps in developing economies, and runs the risk of undoing the
progress made in SDG investment since the launch
of the 2015 global development agenda. This
threatens progress on the SDGs across all countries,
particularly in the LDCs and other structurally
weak economies. International private investment
will be key to alleviate public sector resource
shortfalls for SDG-relevant investment and to
spearhead the global campaign to build back better.
With only 10 years left to complete the sustainable
development agenda, the recent stagnation in
private flows to the developing countries – further
affected by the pandemic – poses a daunting
mission. Policymakers, investors, and producers
face tremendous challenges and regulatory dilemmas in mobilizing and channeling investment for
sustainable development.
UNCTAD’s Investment Policy Framework for Sustainable Development (UNCTAD, 2015) presents a
comprehensive set of investment principles and
policy options that place inclusive growth and
sustainable development at the center of the
endeavor to attract and generate benefits from
investment. Some of the policy areas that deserve
special attention from policymakers and the business community are highlighted in this paper,
including increasing private sector investment,
harnessing sustainable finance instruments, leveraging COVID themes finance, and promoting better ESG standards. The paper also underlines
practical ways and means to pursue these policy
options. Importantly, the paper underscores that
any strategy for investment in sustainable development should include a focus on facilitating investment in different economic and social sectors of
the SDGs.
There are other issues beyond investment which
can affect the path to achieving the SDGs, and
which deserve broad-based policy interventions,
particularly in low- and middle-income economies.
Such challenges include lack of capital, technology,
and skills for production; low product quality and
standards – particularly in sensitive sectors, inadequate or nonexistent enabling policy frameworks,
small markets – with weak purchasing power –
unstable demand, and poor infrastructure. The
global health crisis is unveiling bottlenecks not
only in the health sector but also in productive
sectors linked to global trade and production.
Quality and reliable information on SDG-related
investment and actions are also crucial for research
on investment and inclusive business practices. The
accuracy of available information varies, depending
on the source and the subsequent ability of the
reporting entity to assure this information. It is
therefore important that entities use the right mix
of internal and external sources to ensure the
reliability of published data.
A frontier for policy relevant research is exploring
the innovative ways and means to untap the
potential of private investment, including capital
markets (Zhan, 2020). Despite the boom in sustainability-dedicated investment and pressure on ESG
indicators, funds currently circulate mostly among
developed economies, and do not reach developing
countries at the scale or in the sectors most needed.
Another topic for future research, and challenge for
policymakers, is how to tap into the vast potential
of institutional investment and other sources for
financing the SDGs. This includes research on how
to mobilize and channel sovereign wealth funds
and pension wealth funds, as well as impact
investment and global philanthropic funds towards
the 2030 development agenda. The issues and
frameworks discussed in this paper underline the
need for more consistently conceived and carefully
crafted investment policies and promotion strategies for sustainable development.
ACKNOWLEDGEMENTS
The section on trends in this paper draws on the World
Investment Report 2020 and some ongoing research,
where the authors have been taking the lead. The
paper provides further analytical angles on key investment issues in the context of the SDGs, the impact of
COVID-19, and investment policies. The authors are
grateful to Hafiz Mirza, Rob van Tulder, and to
anonymous referees for useful comments and suggestions. We also thank Arslan Chowdary and Kumi Endo
for valuable research assistance. The views expressed
in this article are the authors’ and do not represent the
views of the United Nations or its member states.
NOTES
1
The SDG-relevant investment sectors first
defined in UNCTAD’s 2014 World Investment
Report covered basic infrastructure sectors (roads,
rail and ports; power stations; telecommunication;
water and sanitation), food security (agriculture
and rural development), climate change mitigation
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Investing in the Sustainable Development Goals
James X. Zhan and Amelia U. Santos-Paulino
182
and adaptation, health and education (UNCTAD,
2014). The report highlighted the need for private
international investment, as a supplement to public and domestic investment, to bridge the financing gap.
2
This section is in general based on the findings
presented in UNCTAD’s World Investment Report
2020 (see UNCTAD, 2020a).
3
See also UNCTAD (2019).
4
Impact investment also falls into this category.
However, because of the large overlap between
impact investing and sustainability-themed bonds
and funds (green bonds and a significant share of
sustainable funds are also categorized as impact
investing), the value of impact investing is not
added to the value of sustainability-dedicated
investment so as to avoid double-counting.
5
Proceeds from green bonds in Africa remained
below $1 billion in the period 2015-2019 years and
are negligible compared to other regions.
6
https://www.iadb.org/en/news/idb-launches-itshttps://
largest-sustainable-development-bond;
treasury.worldbank.org/en/about/unit/treasury/
ibrd.
7
UNCTAD’s report (2020 forthcoming) presents
policy recommendations based on academic
research on the role of foreign direct investment
and multinational enterprises to spread gender
equality and female empowerment around the
globe. The report provides evidence from all major
regions of the world, on the firm-level differences
in labor market outcomes for women across foreign
and domestic firms.
8
The degree to which such policies translate into
concrete outcome can be proxied by the presence
of flexible working arrangements, or the provision
of childcare services that might positively benefit
women and facilitate their participation in labor
markets. The number of companies with such
arrangements or facilities is far lower than those
with a diversity policy.
9
In 2019, UNCTAD published the Guidance on
Core Indicators as a framework for corporate
reporting on their contribution towards the attainment of the SDGs.
10
For example, Scheyvens et al. (2016).
11
UNCTAD (2020) presents UNCTAD’s transformative actions and related plan for a ‘‘Big Push’’ in
private sector investment in the SDGs. This paper
presents the main actions and four immediate
priorities focusing on the pandemic environment.
12
Least developed countries (LDCs) are low-income countries confronting severe structural
impediments to sustainable development. They
are highly vulnerable to economic and environmental shocks and have low levels of human assets.
There are currently 47 countries on the list of LDCs
which is reviewed every 3 years by the Committee
for Development (CDP) of the United Nations.
13
For example, the US established in 2019 the
International Development Finance Corporation,
which has a global investment capitalization of $60
billion. It will provide support to projects in the
form of equity, debt financing, risk insurance, and
technical development in developing regions
around the world.
14
Some papers have shown a positive relationship
between family ownership and a higher inclination
to doing good – which could be directly linked to
the SDG equality focus (e.g., Crilly et al., 2016).
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ABOUT THE AUTHORS
James X. Zhan is Director of Investment and
Enterprise at UNCTAD and editor-in-chief of both
the World Investment Report and Transnational Corporations journal.
Amelia U. Santos-Paulino is Chief of the Investment Issues Section in UNCTAD’s Division on
Investment and Enterprises.
Publisher’s Note Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional
affiliations.
Accepted by Hafiz Mirza, Area Editor, and Kathleen Sexsmith, Guest Editor, 19 December 2020. This article has been with the authors for one
revision and was single-blind reviewed.
Journal of International Business Policy