ESG SDGS: AND THE T
he United Nations (UN) has warned that the COVID-19 pandemic threatens to reverse human development progress for the first time in over 15 years. An estimated 71 million people will be pushed back into extreme poverty around the world with the poorest people and places hardest hit. This crisis has unleashed a development disaster just as the UN announced a ‘Decade of Action’ on its Sustainable Development Goals (SDGs). The COVID-19 crisis has further
worsened what were already high development financing gaps. Even prior to the crisis, the UN Conference on Trade and Development (UNCTAD) estimated SDG financing gaps to be in the range of US$2.5-3 trillion annually. As demand has fallen, revenues have declined. Remittances have also dropped sharply (by an estimated 20 percent in 2020, according to the World Bank). The African Development Bank has warned that 30 million jobs in Africa are at risk,
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and that private sector companies – large and small alike – face an unprecedented crisis. Combined with high debt (and
increasing borrowing costs), developing countries simply don’t have the fiscal space to respond as advanced economies have done with large economic stimulus packages. While multilateral financial institutions have pledged billions in economic aid, this is mostly loans and represents a fraction of the income countries have lost to the crisis. Development aid flows are also under pressure, as economic conditions remain difficult in key donor nations. Data from Development Initiatives shows that aid commitments from bilateral donors were almost 22 percent lower than expected in the first six months of 2020. The investment environment has
therefore become much more difficult and uncertain across the developing world. What does this mean for investments that take into account
How will the COVID-19 pandemic affect ESG investments? And is it possible to ensure that the current focus on ESG standards benefits low- income countries? Gail Hurley calls for more patient capital and a hands-on approach…
A PERFECT PARTNERSHIP?
environmental, social, and corporate governance (ESG) factors in these same countries? Will the COVID-19 pandemic put a brake on ESG-aligned investment? Or could it be a catalyst for even more socially and environmentally-conscious investing in developing countries? Over the last decade, ESG-aligned
investments have grown rapidly in number, variety and size. Green bond issuance topped US$257 billion in 2019, up 50 percent on the previous year. While issuance has dipped in 2020, markets have instead seen a rise in ‘social’ and COVID-19 themed bonds – over US$65 billion this year so far. UNCTAD estimates that the total value of sustainability oriented bonds and funds is now between US$1.2 and 1.3 trillion worldwide. Since its launch 15 years ago, the UN’s Principles for Responsible Investment (PRI) initiative has become a dynamic community of almost 3,000 organizations and institutions around the world interested in responsible investment. Globally, there
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