Remarks by Angel Gurría
18 January 2019 - OECD, Paris
(As prepared for delivery)
Ladies and Gentlemen,
It is my pleasure to welcome you to the final day of the Private Finance for Sustainable Development Week. More than 500 stakeholders in the field of sustainable development – from Ministers, to CEOs, to representatives from philanthropy; from civil society, to think-tanks and Development Finance Institutions – have come together to demonstrate a shared commitment to putting “impact” at the heart of financing for sustainable development.
This commitment to the “Impact Imperative” will determine progress towards our shared goals for sustainable, inclusive development.
Why is the “impact imperative” such an important 2019 resolution for the 2030 Agenda? The answer is simple: four years after the Paris Agreement and the Sustainable Development Agenda set out to build a more inclusive and universal order of development finance, we still have no way of measuring our collective impact. This needs to change.
At a time of slowing global economic growth, the basic needs of developing countries continue to rise. Needless to say that the task ahead of us is urgent, the 2030 Agenda brings massive challenges, at the same time it is also key to unlocking hope and opportunities. As such, we have a moral obligation and policy imperative to measure and manage the impact of our collective investments in development. The OECD has been focusing many strands of its work to contribute to the sustainable development agenda from the governance and financing challenges to calculating the distance to the targets.
We have already made significant progress in establishing a rulebook on how to unlock additional finance for development. The OECD has played a key role by highlighting new approaches and tools to leverage and redirect private finance for sustainable development. This includes social impact investing focusing on poverty, education, disability, health, housing or unemployment outcomes; as well as approaches used in blended finance for promoting more responsible conduct and green finance.
Complimentary to this work, the OECD is also helping to unite the private and public sectors around the objective of leaving no-one behind under the Business for Inclusive Growth Platform. The Platform is building a global coalition of companies, governments and civil society actors to make capitalism more inclusive and foster more just and sustainable growth.
Moreover, since 2015, we have often said that in order to achieve the SDGs, we need to turn “billions into trillions”. Today, we know that trillions exist, there is in fact much more SDG financing available than prior measurements indicated.
For example, the OECD estimates that over 81 billion US dollars in private finance for development was mobilised by public finance over the past four years. In addition, preliminary estimates of cross-border flows for sustainable development amount to 580 billion USD (in gross disbursements). This includes official bilateral flows from DAC providers, official flows from emerging market economies, and official flows from multilateral institutions.
This does not mean that we should scale back our efforts to mobilise new finance for development. However, it does mean that we need to adopt and manage a more strategic mobilisation narrative that is driven by impact.
For these investments to be effective, we must increase our focus on impact. As we further engage private sector actors, such as foundations and institutional investors, we need to ensure that impact is actually measured.
To do so, policies need to keep up with the rapidly changing Social Impact Investing market. Yesterday, we released the OECD’s Social Impact Investment report, which shows that the number of impact investors – those who provide finance to organisations addressing social and environmental needs with the expectation of a measurable social and financial return – has risen from under 50 in 1997 to well over 200 in 2017.
In addition, currently, there are over 228 billion USD in Social Impact Investing Assets under management, of which 56% is allocated to emerging markets. That amounts to 127 billion USD – and growing – of Social Impact Investing for impact in emerging countries. It is becoming increasingly challenging for policies to keep up and adapt to this pace.
By gathering here today, we are taking the first steps on what is an important journey together. A journey where we create a common understanding of what impactful sustainable development actually means and implies for public and private sector collaboration.
Today we have an increasingly active and populated public and private marketplace for sustainable development, coupled with the SDG commitments. We also have global challenges related to climate. We therefore do not have the luxury of investing in development without certain, sustainable impact.
This means ensuring that financing is going where it is needed most – both in terms of the more challenging sectors as well as country contexts. Throwing more money against protracted challenges using existing approaches will not work. We must catalyse new and innovative approaches to address the SDGs more effectively and efficiently.
For example, bKash, is a social enterprise focused on enhancing access to financial services for the 70% of the population living in rural areas of Bangladesh through the transfer of funds through mobile devices (over 68% of the population have mobile phones).
Another example is Clinicas, a social enterprise in Mexico which provides specialised care through their low-cost clinics to the country’s poorer demographic groups.
We must also focus on the data challenges both in terms of increasing transparency and measuring impact – this will help us to develop the necessary frameworks and data standards. Finally, we must leverage policies to provide greater incentives and create an enabling environment for investment.
Ladies and Gentlemen:
I invite you all to commit to the “Impact Imperative” Call to Action document that will result from this meeting. Identifying and measuring our impact will enable us to make more effective use of financing for sustainable development, as well fine-tune our policies and take them to the next level.
As the world continues to face increasing development challenges, we must also continue to channel the momentum that we have created this week and work together to design, develop and deliver better policies for better lives. Thank you.