Time to accelerate capital mobilisation for the SDGs in emerging markets
A Progress Report on the Last Two Years of Capital Mobilisation for the SDGs.
The COVID-19 pandemic has widened the financing gap to meet the SDGs, with the world also off-target to meet the 1.5C temperature increase goal laid out by the 2015 Paris Agreement. An estimated $40-60 trillion is needed over the next five years alone to address pressing environmental and social challenges.
Climate finance broke through the $1 trillion mark in 2022, but remained a fraction of fossil fuel subsidies that still amount to $7 trillion as economies contend with inflation and the impact of conflict in Ukraine on energy supply.
Renewed market volatility and rising interest rates have put pressure on investor appetite for EMDE assets, meaning that international investment is failing to reach the geographies that need it most. Only 13% of global climate finance is going to EMDEs and private finance to EMDEs (excluding China) is estimated to have declined by 22% from 2021 to 2022.
Governments and institutional investors have acknowledged the importance of a Just Transition to Net Zero. However, initiatives have yet to deliver on promises and have largely failed to integrate social considerations (i.e. the ways in which climate change will affect jobs, access to water, food, and other resources, human security and livelihoods) into environmental and climate targets.
There will never be enough public money to achieve the UN Sustainable Development Goals and ensure a Just Transition. That was the starting point for The Impact Taskforce’s (ITF) work two years ago and it is as true today as it was then. In contrast, upwards of $230 trillion is traded annually in the capital markets and institutional investor appetite to deploy capital into investments with environmental, social, and governance (ESG) and impact objectives is growing.
The inescapable conclusion is that only private capital, often layered with public or philanthropic capital, has the capacity to support projects and initiatives that will drive the world towards Net Zero and ensure that no one is left behind.
View the Japanese translation of the report here. Thanks to the efforts of SIMI (English); SIMI (Japanese only).
Krisztina Tora
Managing Director - GSG Impact
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The Impact Investing Institute (UK GSG National Partner)
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The Blended Finance Taskforce hosted by Systemiq
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Convergence
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The Collaborative for Frontier Finance
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A guide for Development Finance institutions (DFIs) and all practitioners wanting to increase the flow of capital to SMEs in emerging markets and developing economies (EMDEs).
The report offers impact economy ecosystem analysis on impact progress in 34 countries with cross-cutting insights. What's unique is that it offers more than market sizing data; it explains how countries are redesigning for impact through policy and practices, building the infrastructure and incentives for impact economies. This includes tracking government actions, market building, impact capital supply, impact capital demand, and contributions to the UN Sustainable Development Goals.
The GSG Impact Partnership reached a pivotal moment, now spanning 46 countries and covering 65% of the world’s population. Our work in 2024 was centred around (i) advancing impact economies by expanding our community and nurturing ecosystem growth (ii) mobilising private capital at scale, especially in emerging markets, and (iii) enabling greater inclusivity in global sustainability disclosure standards.
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