By Andy Shen, Senior Specialist, Multilateral Policy
While “climate COP” (the UN Framework Convention on Climate Change Conference of the Parties) and “biodiversity COP” (the Convention on Biological Diversity Conference of Parties) are familiar to institutional investors in the field of responsible investment, this summer, a less well known but equally important UN conference took place in Seville, Spain – the Fourth International Conference on Financing for Development (FFD4). The PRI contributed to the FFD4 process through our engagement with governments on sustainable finance policy and by hosting events in Seville with the UN, businesses and responsible investors to discuss the enabling environment for long-term investment in sustainable development.
Despite geopolitical tensions and strained economic relations, UN Member States succeeded in adopting a pragmatic FFD4 Outcome Document which reflects consensus among all States (except the US) on how to close the $4 trillion financing gap for sustainable development.
The Compromiso de Sevilla
The Outcome Document, also known as the Compromiso de Sevilla, could be a catalyst for increased investment in emerging markets and developing economies (EMDEs) through private finance, and better development outcomes.
Paragraph 34 will be of particular importance to responsible investors. It identifies, and encourages businesses, investors and States to adopt, key measures and tools that support investing for sustainable development impact.
Paragraphs 34 (d), (e), (f) and (g), on sustainable business and finance regulation, specifically address the role of sustainable business and finance policy and regulation in achieving the Sustainable Development Goals (SDGs). These paragraphs effectively give the UN the mandate to support countries in developing their national sustainable business and finance frameworks. The inclusion of these provisions in the Outcome Document is a milestone in the development of sustainable business and finance policy and regulation globally, and gives an indication of the progress that has been made since the last FFD conference in 2015, for which the Outcome Document made scant mention of sustainable business and finance policy and regulation.
The number of sustainable business and finance policies and regulations has grown rapidly in many markets over recent years, but significant variation can increase the cost of doing business for investors and hinder financial flows to EMDEs. Major differences can also result in uneven progress on global sustainability goals due to inconsistent standards and measurements, as well as compliance challenges for private entities and developing countries.
The UN Member States that supported the inclusion of Paragraphs 34 (d), (e), (f) and (g) in the Compromiso de Sevilla recognise the importance of addressing the increasingly fragmented sustainable business and finance policy and regulation landscape. Closer coordination and collaboration among the many bodies involved in developing sustainability standards, policies and regulations will be essential to the development of an interoperable framework that increases the flow of private capital to economic activities that support sustainability goals. The Sevilla Platform for Action Paragraph 34 Initiative aims to achieve just that.
The Sevilla Platform for Action Paragraph 34 Initiative
By joining the Sevilla Platform for Action Paragraph 34 Initiative, the PRI has agreed to collaborate with the UN Department of Economic and Social Affairs (UN DESA), UN Development Programme (UNDP), UN Environment Programme Finance Initiative (UNEP FI) and the Global Reporting Initiative (GRI) to support UN Member States to implement their commitments under Paragraphs 34 (d), (e), (f) and (g). The Paragraph 34 Initiative will complement and strengthen existing efforts within financial markets by providing a platform for closer coordination and collaboration.
Alongside the recent launch of the PRI’s Sustainable Finance Policy Toolkit, this new platform will enable PRI signatories to share their perspectives on challenges to sustainable investment and how various policies and regulations could help address them, while also supporting governments’ efforts to achieve their sustainability goals.
The Fifth International Conference on Financing for Development, likely to take place in 2030, will address how to finance the post-2030 sustainable development agenda. Reducing the time between FFD conferences will provide responsible investors with more opportunities to support enabling policy reforms at an international level. While there is still much to be done on financing for the SDGs, we should recognise that significant progress has been made on sustainable business and finance policy and regulation in the last decade. There may be some headwinds in the near term, but the long-term trajectory is promising.
PRI disclaimer: The PRI blog aims to contribute to the debate around topical responsible investment issues. It should not be construed as advice, nor relied upon. The blog is written by PRI staff members and occasionally guest contributors. Blog authors write in their individual capacity – posts do not necessarily represent a PRI view. The inclusion of examples or case studies does not constitute an endorsement by PRI Association or PRI signatories.
