Despite strong growth in the green finance market in recent times, the current global economic system will not be able to underpin the level of public and private financing needed to meet the United Nations’ (UN) Sustainable Development Goals (SDGs), Edie informed.
That is the conclusion of a new report from think tank T20, which calls on governments to integrate the agenda of the 17 Global Goals into their nation’s financial systems in order to spur the low-carbon transition.
Published on Wednesday (22 August), the report notes that despite strong growth in the green bonds market, which grew by a staggering 78% between 2016 and 2017, such bonds still account for less than 1% of all bonds issued globally.
It also emphasizes the continuing gap between clean worldwide energy investments and fossil fuel investments, which stood at $324bn and $800bn respectively in 2016. The report attributes this slow progress to poor governance and the fact that the architecture of the world’s existing financial systems has not been altered since the Paris Agreement.
“Finance is a keystone to the successful implementation of the 2030 Agenda, but significant barriers exist to securing adequate public and private financing to achieve the SDGs,” the report states.
“The urgency to act indicates the need for a broader strategy that aligns the systemic features of finance and its relationship with the universally-embraced 2030 Agenda.”
UN Secretary-General António Guterres has claimed that $3-5trn of annual investment will be needed to finance the SDG agenda. Speaking at the most recent annual UN Private Sector Forum, Guterres said that finance could “make or break” the UN’s “carefully laid plans” for 2030.
Since then, the UN has increased this annual estimate to $5-7trn, and concluded that there is currently is a $2.5trn annual investment gap.