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Sustainable Development Goals: Harnessing Business to Achieve the SDGs through Finance, Technology and Law Reform

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Sustainable Development Goals: Harnessing Business to Achieve the SDGs through Finance, Technology and Law Reform

Julia Walker, Alma Pekmezovic, Gordon Walker

ISBN: 978-1-119-54180-6 August 2019 432 Pages

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Achieving the Sustainable Development Goals through Finance, Technology and Law Reform

Achieving the SDGs requires a fundamental rethink from businesses and governments across the globe. To make the ambitious goals a reality, trillions of dollars need to be harnessed to mobilise finance and accelerate progress towards the SDGs.

Bringing together leaders from the World Bank, the financial and business sectors, the startup community and academia, this important, topically relevant volume explains what the SDGs are, how they came about and how they can be accelerated. Real-world case studies and authoritative insights address how to direct investment of existing financial resources and re-align the global financial system to reflect the SDGs.

In depth chapters discuss how financial institutions, such as UBS Wealth Management, Manulife Asset Management and Moody’s Rating Agency are supporting the SDGs. The opportunities arising from Blockchain, Big Data, Digital Identity and cutting-edge FinTech and RegTech applications are explored, whilst the relevance of sustainable and transparent global supply chains is underscored. Significant attention is paid to law reform which can accelerate progress of the SDGs through SME Financing, Crowdfunding, Peer-to-Peer Lending and tax restructuring.

To achieve the ‘World We Want’, much needs to be done. The recommendations contained within this book are critical for supporting a fundamental shift in thinking from business and governments around the world, and for building a more just and prosperous future for all.

About the Editors xvii

Notes on Contributors xix

Foreword xxix

Foreword: Implementation of the SDGs xxxi

Preface xxxv

Introduction 1

Part One: Overview and Context 9

Part Two: Where Will the Money Come From? Financing the SDGs 10

Part Three: Technology, Innovation, and Entrepreneurship 12

Part Four: Facilitating the SDGs by Legal Infrastructure Reform 15

Part I Overview and Context 17

1 The UN and Goal Setting: From the MDGs to the SDGs 19
Alma Pekmezovic

Introduction 19

What is Development? 20

Is There a Right to Development? 22

Measuring Economic Development 22

Measuring Non-Economic Aspects of Development 23

The Sustainable Development Goals (SDGs) 24

Situating the SDGs in the International Legal Framework 28

Theories of Development: Towards a New Theory of Sustainable Development 29

Economic Theories of Development 30

Cultural Theories of Development 30

Geographic Theories of Development 31

Institutional Theories of Development 32

A New Theory of Sustainable Development 34

Measuring Progress Towards the SDGs 34

Conclusions 35

2 SDGs and the Role of International Financial Institutions 37
Suresh Nanwani

Introduction 37

Response and Implementation of the SDGs by IFIs 38

Project Processing and Actions Taken by IFIs to Implement the SDGs, and Responses from Other Development Actors 44

Conclusion and Recommendations for IFIs to Meet SDG Goals and Targets 48

3 Towards a New Global Narrative for the Sustainable Development Goals 53
Iason Gabriel and Varun Gauri

Introduction 53

How SMART Are the SDGs? 55

Goals That Stretch 59

Goals That Inspire 62

Sloganising the SDGs 64

Towards a New Global Narrative? 66

Conclusion 69

4 Overcoming Scarcity: The Paradox of Abundance: Harnessing Digitalisation in Financing Sustainable Development 71
Simon Zadek

Scarcity: The Paradox of Abundance 71

Financing: A Systemic Challenge 72

Action on System Design 74

Digital Financing of the SDGs 76

Dilemmas: Digitalisation and Dark Financing 80

Sizing the Prize 82

What Next? 84

Concluding Comments 85

Part II Where Will the Money Come From? Financing the SDGs 87

5 The New Framework for Financing the 2030 Agenda for Sustainable Development and the SDGs 89
Alma Pekmezovic

Introduction 89

Sources of Development Finance 90

Domestic Public and Private Sources 90

Domestic Resource Mobilisation (DRM) 90

International Public and Private Finance 93

The Role of International Official Development Assistance (ODA) 94

Private Philanthropy 95

Sovereign Wealth Funds, Pension Funds, Insurance Companies, and Investment Funds 96

Barriers to Greater Private Investment 97

The Role of Private and Blended Finance in Development 98

The Development Impact and Risks of Blended Finance 100

An Overview of Blended Finance Mechanisms 101

Innovative Financing Tools: Social Impact Bonds (SIBs) and Development Impact Bonds (DIBs) 102

Best Practices for Engaging the Private Sector 105

Conclusions 105

6 The Contribution of the International Private Sector to a More Sustainable Future 107
Martin Blessing and Tom Naratil

Ready and Able to Invest 108

Commercial and Investment Benefits 109

What is Needed to Mobilise Private Sector Money? 110

Partnerships for a More Sustainable Future 112

Partnerships to Rationalise Sustainable Investment Markets 112

Partnerships to Democratise Sustainable Investment Markets 116

7 Re-Orienting the Global Financial System Towards Sustainability 121
Alma Pekmezovic

Introduction 121

Background 123

The Legal and Regulatory Framework 125

Company Reporting: Sustainability Disclosure Requirements 128

Institutional Investors: Responsible Investing and Investing for Impact 132

Fiduciary Duties of Institutional Investors and Other Financial Intermediaries 136

Fostering Long-Term Sustainability 140

Conclusion 142

8 How Asset Managers Can Better Align Public Markets Investing with the SDGs 143
Emily Chew and Margaret Childe

Why the SDGs Could Transform Sustainability Investing 143

Implementing the SDGs as an Analytical Framework to Align Investing with the SDGs 145

Objectives of Manulife Investment Management’s Approach to SDG-Aligned Investing 145

SDG Assessment Methodology Overview 147

Investable Themes 147

SDG Alignment Assessment 150

Exclusions 152

Applying the SDG Analytical Framework to the S&P 500 Index 152

The Current State of Corporate Goals with Respect to SDG Impact 153

The Current Opportunity Capture of SDG-Related Profit Opportunities 156

Areas in which Corporate Operational Conduct is Most Strongly Aligned with SDG Impact 159

What SDG Developments Can We Expect in the Public Markets Investor Community in 2020 and Beyond? 161

SDG-aligned Investing is Expected to Become Easier 162

Corporate Reporting on the SDGs Will Improve 163

Constructive Dialogue or Engagement with Companies is Necessary to Achieve the SDGs 163

A Call to Action 164

Disclaimer 165

9 The Significance of Sustainable Development Goals for Government Credit Quality 167
Alastair Wilson

Environmental Preservation Influences Credit Quality, Including Through the Impact of Climate Change on Growth and Institutions’ Resilience to It 168

Social Risks Such as Poverty and Inequality Feed into Economic and Institutional Strength 170

Strong Institutions Are Closely Related to Ratings and Ratings Factors 174

SDGs Influence Government Credit Quality Through Different Channels, to Varying Degrees 176

Part III Technology, Innovation, and Entrepreneurship 177

10 FinTech for Financial Inclusion: Driving Sustainable Growth 179
Dirk A. Zetzsche, Ross P. Buckley, and Douglas W. Arner

Introduction 179

Financial Inclusion and Sustainability: Introducing the Long-Term Perspective 180

Financial Inclusion: Why It Matters 180

Two Sides of the Same Coin 181

FinTech as a Tool for the SDGs 181

FT4FI Initiatives 183

Four Pillars of Digital Financial Transformation 184

Experiences and Lessons 184

Financial Inclusion Initiatives Since 2008: G20 184

Financial Inclusion Initiatives Since 2008: AFI 185

FinTech and Financial Inclusion: The Foundation of Digital Financial Transformation 185

Pillar I: Digital ID and eKYC: Establishing the Foundation 186

Example: The Indian Aadhaar System 186

IrisGuard 187

Regional Approaches: eIDAS in the EU 188

eKYC and KYC Utilities 188

Example 1: South Africa Web-Based KYC Database 188

Example 2: India’s e-KYC System 188

Example 3: eIDAS and eKYC 189

Synthesising the Lessons 189

Pillar II: Open Electronic Payment Systems: Building Connectivity 189

Mobile Money 190

Designing Regulatory Infrastructure for an Open Electronic Payments System 191

Pillar III: Account Opening and Electronic Government Provision of Services: Expanding Usage 192

Electronic Payment: Government Salaries and Transfers 193

Electronic Payment and Provision: Other Core Services 194

Pillar IV: Design of Financial Market Infrastructure and Systems: Enabling New Wider Development 195

Transforming Credit Provision: From Collateral and Microfinance to Cash Flow 195

Adding Insurance and Investments to Savings and Credit 196

M-Akiba 197

Building Better Financial Infrastructure 198

The EU Example: GDPR, PSD2, MiFID2 198

Developing a Comprehensive Strategy 198

Strategic Approach 198

The Challenge of Technology 198

Regulatory Sandboxes, Piloting, and Test-and-Learn Approaches 199

Balancing Inclusion with Other Regulatory Objectives 201

Designing Regulatory Systems: The Example of Mexico 201

Towards Inclusive and Sustainable Growth 202

11 Financing and Self-Financing of SDGs through Financial Technology, Legal, and Fiscal Tools 205
Jon Truby

Introduction 205

Self-Sufficient Financing and Achievement of SDGs through Tax Reform 207

Shifting the Tax Burden to Create a Double Dividend 207

Base Erosion and Digital Services Taxation 208

Digitisation of Tax Administration 209

Amendment of the Chicago Convention 210

Self-Sufficient Financing of SDGs through Financial Technology 212

Digitisation of Money 212

Digital Identity 214

Financing SDG 7 and Related Goals through Financial Technology 215

Offsetting Investments in Energy-Intensive Digital Currencies 215

Digital Token Investments 216

Conclusion 217

12 SDG Challenges in G20 Countries 219
Guillaume Lafortune and Guido Schmidt-Traub

Introduction 219

The SDGs as Problem-Solving Tools for Transformative Actions and Policies 229

Long-Term Planning and Back-Casting 230

Data and Monitoring 231

Financing 232

Technology Missions 233

Conclusion 234

13 The Future-Fit Business Benchmark: Flourishing Business in a Truly Sustainable Future 235
Geoff Kendall and Martin Rich

Introduction 235

The Journey Ahead 236

The World We Want 236

The World We Have (and How We Got Here) 236

The World We Can Create 238

Why a Systems View is Good for Business 240

A Star to Steer By 243

Current Assessment Methods Are Flawed 243

Starting with the End in Mind 244

How Much is Enough? 244

A Holistic View of Future-Fitness 245

A Practical Tool 246

Future-Fit Break-Even Goals 246

Future-Fit Positive Pursuits 248

Engaging Stakeholders More Effectively 250

Conclusion 251

14 Financing for Youth Entrepreneurship in Sustainable Development 253
Inna Amesheva, Alex Clark, and Julian Payne

The Role of Young Entrepreneurs in Sustainable Development 253

The Needs of Young Entrepreneurs Working on the SDGs 254

Barriers to Innovation and Scale 254

Supporting Young Entrepreneurs Working on the SDGs 257

The Financing Options Available to Young Entrepreneurs Working on the SDGs 258

Sources and Instruments of Finance for Young Entrepreneurs 259

Bridging the Gap Between Young Entrepreneurs and the SDGs 262

Sectoral Coverage 262

Geographical Coverage 264

Beyond Banks: Alternative Financial Structures for Youth-oriented Sustainable Development Initiatives 266

Prioritising Financial Interventions for Youth Entrepreneurs and the SDGs 267

Non-financial Services 268

Developing a Robust Investment Pipeline 270

Designing Youth-focused Funding Vehicles for the SDGs 271

15 Transparency in the Supply Chain 275
Julia Walker

Introduction 275

Supplier prequalification tools 279

Emerging Technology in Supply Chains 281

The diamond industry 282

Summary 284

Part IV Facilitating the SDGs by Legal Infrastructure Reform 285

16 Facilitating Sustainable Development Goal 8 by Legal Reform Measures 287
Gordon Walker

Introduction 287

Contextual Issues 288

Legal Traditions 288

Regulators and Policymakers 289

Implementation Problems 290

Capital Formation for Micro-, Small-, and Medium-Sized Enterprises 291

Meta-Strategy: The Promise of e-Government 291

The SDGs and Domestic Policy Formation 292

Facilitating SDG 8 by Law Reform 293

Hong Kong 293

Fundraising Law in Hong Kong: A Brief Overview 294

Safe Harbours in the 17th Schedule of CWUMPO 295

ECF and P2PL in Hong Kong 296

Supporting FinTech and MSME Fundraising Solutions in Papua New Guinea 297

Survey of Papua New Guinea Legislation 297

Offers Excluded from the Prospectus Requirements: CMA, Schedule 6 298

Issues Excluded from the Prospectus Requirements: CMA, Schedule 7 299

Securities Commission Power to Amend Schedules: CMA, Section 470 299

Legal Reform Opportunities for ECF and P2PL in PNG 299

Conclusion 300

17 Facilitating SDGs by Tax System Reform 303
Benjamin Walker

Introduction 303

Sustainable Development Goals 304

Goal 3: Good Health and Well-Being 304

Goal 8: Decent Work and Economic Growth 304

Goal 10: Reduce Inequality within and among Countries 305

Goal 12: Ensure Sustainable Consumption and Production Patterns 307

Goal 16: Peace, Justice and Strong Institutions 308

Goal 17: Strengthen the Means of Implementation and Revitalize Global Partnership for Sustainable Development 309

A Wider Picture of Development 310

Taxes and Economic Development 310

Tax Effort 311

Taxes and Spending 312

Taxes and Technology 313

Blockchain 313

Artificial Intelligence 314

Tax Law Reform 314

Recent Developments 316

Conclusion 316

18 Facilitating the SDGs by Competition and Consumer Law and Policy Reform: Aspirations and Challenges in Papua New Guinea 317
Brent Fisse

Introduction 317

Proposed PNG Competition and Consumer Reforms and SDGs 318

Tailoring Law and Policy to the Particular Needs and Circumstances of PNG 320

Removing Statutory and Regulatory Barriers to Entry 322

Designing Competition Rules That Are Practical and Avoid Excessive Technicality 324

Harnessing Consumer Protection Laws to Protect and Promote Small Business 327

Using Enforcement Mechanisms That Have Some Chance of Working in PNG 329

Conclusion 331

Resolution Adopted by the General Assembly on 25 September 2015 333

Transforming Our World: The 2030 Agenda for Sustainable Development 333

Preamble 333

People 334

Declaration 335

Introduction 335

Our vision 336

Our shared principles and commitments 336

Our world today 337

The new Agenda 339

Means of implementation 344

Follow-up and review 346

A call for action to change our world 347

Sustainable Development Goals and targets 347

Goal 1. End poverty in all its forms everywhere 349

Goal 2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture 350

Goal 3. Ensure healthy lives and promote well-being for all at all ages 351

Goal 4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all 352

Goal 5. Achieve gender equality and empower all women and girls 353

Goal 6. Ensure availability and sustainable management of water and sanitation for all 354

Goal 7. Ensure access to affordable, reliable, sustainable and modern energy for all 354

Goal 8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all 355

Goal 9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation 356

Goal 10. Reduce inequality within and among countries 357

Goal 11. Make cities and human settlements inclusive, safe, resilient and sustainable 357

Goal 12. Ensure sustainable consumption and production patterns 358

Goal 13. Take urgent action to combat climate change and its impacts 359

Goal 14. Conserve and sustainably use the oceans, seas and marine resources for sustainable development 360

Goal 15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss 361

Goal 16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels 362

Goal 17. Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development 363

Finance 363

Technology 363

Capacity-building 364

Trade 364

Systemic issues 364

Means of implementation and the Global Partnership 365

Follow-up and review 369

National level 371

Regional level 372

Global level 372

Index 375