Preface
The recession brought on by the COVID-19 pandemic is the worst human and financial crisis of the 21st century. Unlike previous financial crises, this recession impacts trade and investment chains in developed and developing countries alike. Global economic GDP could contract by up to 4.5% in 2020. Nearly two years of progress to eradicate poverty have been erased while hundreds of millions of jobs have been lost across the world.
Confronted with these unprecedented challenges, one question needs to be asked: does the ambition of our global response match the severity of the crisis? Certainly, the current economic, social and environmental threats will not be overcome with economic co-operation alone. We need all stakeholders to work together across all fronts: economic, social and development. Like climate change and migration, the pandemic and its impact know no borders. We are all in it together, and failure to support even one member of the international community risks global economic and development setbacks for all.
The OECD Global Outlook on Financing for Sustainable Development 2021 provides a new holistic view on the state of finance in support of both people and the planet. It also highlights how we can enable better investments. Policy tools and recovery strategies must address the risk of collapse of financing for sustainable development. While providing a short-term emergency response, they must also seize the opportunities to rebuild a financial system that phases out wasteful incentives and prevents market failures over the long-term.
The Global Outlook makes a powerful argument to promote joint action by both public and private sector actors to change the way investments are made, and to align with – and support – the UN Sustainable Development Goals (SDGs). If we look at financing for sustainable development through the aid lens alone, we will miss the big picture. The policies and resources of OECD countries – such as taxation, investment and remittances – can have a tremendous impact on facilitating more sustainable and inclusive investment and finance. Indeed, over 80% of USD 379 trillion in financial assets, managed globally by banks, asset managers and institutional investors, are held in OECD countries. Yet, these resources are not effectively used and risk contributing to a misalignment of the SDGs.
The Global Outlook also makes a strong case for the alignment of financing to support the SDGs, to make sure no person, no country and no goal is left behind. It is no longer possible to sustain the long-term value of assets without integrating global non-financial risks like climate or health. Raising the bar with private sector actors can strengthen accountability and transparency, and can preserve the long-term value of assets. But for this to work, and for positive impacts to materialise, the global goals must be translated into a language suited for the finance and business community. Moreover, governments must ensure the policy coherence of domestic and international SDG financing strategies.
Achieving the 2030 Agenda is not only an ethical and political imperative, it is a risk mitigation strategy. The crisis has transformed opportunities into imperatives for action. This Global Outlook delivers the evidence, analysis and recommendations needed to strengthen collective and comprehensive action in support of financing for sustainable development.
