October 2017
abstract
Responsabilité & Environnement
Quel financement efficace des Objectifs de développement durable (ODD) ?
Issue editor:
Françoise ROURE
Issue 88
Editorial : Le Plan d’investissement extérieur de l’Union européenne : un nouveau partenariat pour le développement
1 - Scaling the cliff: From $131 billion of official development assistance to the trillions needed
Reaching the UN’s sustainable development goals: The World Bank’s proposals
By Hervé de VILLEROCHÉ
Administrateur pour la France au Fonds monétaire international et à la Banque mondiale
and Cécile POT
Conseillère de l'Administrateur pour la France, groupe Banque mondiale et Fonds monétaire international
Hervé de Villeroché , administrator for France at the International Monetary Fund and the World Bank; and Cécile Pot , advisor to the administrator for France at the International Monetary Fund and the World Bank Private capital flows dominate the system for financing development; public aid clearly does not meet up to developing countries’ needs. Multilateral sponsors, such as the World Bank, must, therefore, create investment opportunities for domestic, private and public, financing. The World Bank has changed its role and interventions so as to favor the emergence of new markets in poor countries, attenuate the risks associated with investments in developing lands and optimize the use of concessional resources with the aim of minimizing the public debt of its borrowers. The Bank is orienting its actions toward two of the UN’s sustainable development goals (eradicate extreme poverty and reduce inequality) and three major pillars (sustainable, inclusive economic growth; human development; and resilience to global shocks and menaces). With respect to the Paris Climate Agreement of 22 April 2016, the World Bank has already taken account of the climate in all its development policies. To maximize the effectiveness of its interventions, it has distributed a small toolkit of financial instruments for optimizing the commitments made by four institutions that work together to create conditions conducive to development.
How to prevent systemic crises and stranded assets related to climate change?
By Dominique AUVERLOT
Directeur de projet auprès du Commissaire général de France Stratégie (Commissariat général à la stratégie et à la prospective)
The Paris Climate Agreement foresees not only a definite limit on the increase of the planet’s temperature (below 2°C compared with the preindustiral era) but also, and above all, a carbon-neutral society for the second half of this century. This implies, if not a halt, at least an extremely pronounced slowdown in fossil fuel consumption and an unprecedented energy transition. Under the International Energy Agency’s 2°C-scenario of March 2017, two-thirds of attested fossil fuel reserves will have to stay in the ground. This naturally raises questions about the prospects of financial assets in fossil fuels. To prevent the systemic risks related to these stranded assets, the chairman of the Financial Stability Board has recommended that firms provide potential investors and their shareholders with all necessary information on the climate risks associated with their assets so that they form their own opinion. It would be worthwhile using the 2°C-scenario for this purpose.
Agenda 2030 for financing sustainable development: The Addis Ababa conference and its followup
By Cyrille PIERRE
Directeur du Développement durable à la direction générale de la mondialisation, de la culture, de l’enseignement et du développement international au ministère de l’Europe et des Affaires étrangères
Cyrille Pierre , director of Sustainable Development at the Direction Générale de la Mondialisation, de la Culture, de l’Enseignement et du Développement International, French Ministry of Foreign Affairs and Europe To reach the UN’s sustainable development goals and cope with the effects wrought by climate change, much more funding is needed than what official development assistance provides. Adopted during the third UN conference “Financing for Development”, the 2015 Addis Ababa Action Agenda, has responded to this problem with a global framework that emphasizes raising funds from each country’s domestic resources and orienting public and private savings toward sustainable development. As the annual followup tends to show, the international community is active in implementing the agenda. Weak points subsist, however, in relation to preserving a coordinated multilateral approach. Furthermore, progress is still to be made in raising funds for the fight against climate change and including the private sector in this fight.
Adapting statistics at the Development Assistance Committee to the UN’s sustainable development goals
By Valérie THIELEMANS
Gestionnaire principal des bases de données statistiques, direction de la coopération et du développement, OCDE
The adoption in 2015 of Agenda 2030 on sustainable development has sparked discussions about how to adjust, in line with the UN’s sustainable development goals, the statistical classifications of the OECD’s Development Assistance Committee (DAC) in order to produce data about financing aid and development. Despite a rather satisfactory concordance between the sustainable development goals and these classifications, loopholes and shortcomings exist; and adaptations must be made.
The difficulties of financing the protection of the environment: Which way out?
By Dominique DRON
Ingénieure générale des mines, Conseil général de l’Économie, de l’Industrie, de l’Environnement et des Technologies (CGEIET)
Financing the environmental transition has as much to do with cognitive representations, the structure of knowledge and financial conventions as with technical decisions and the money available. A cultural legacy and disciplinary compartmentalization have contributed to building a financial system that has, in both theory and practice, seceded from the economic, social and environmental spheres. It is high time to review financial principles and tools so as to tune finance to the “rest of the world”, specifically to the environmental transition. Two structural difficulties (self-referencing and substitutability) come under discussion along with a few possible solutions (including monetary ones).
2 - How France and the European Union have chosen to finance the sustainable development goals
Which financial levers of cooperation for France? A critique of their effectiveness
By Philippe JAHSHAN
Conseil économique, social et environnemental, rapporteur de l’avis sur la Coopération française dans le cadre de l’Agenda 2030 du Développement durable (octobre 2016), président de Coordination SUD (Solidarité Urgence Développement)
Philippe Jahshan , Conseil économique, social et environnemental, secretary of the opinion about French cooperation with Agenda 2030 (October 2016), chairman of Coordination SUD (Solidarité Urgence Développement) France must turn its current weaknesses into assets for its policy of aid to development. It must: increase the amount of its official development assistance to 0.7% of gross national income (GDI), in compliance with its commitment to the Paris Climate Agreement; ensure a strategic and political management of its aid by involving “organizations representing civil society” in order to augment transparency; put its sectoral assets to better use; or even develop effective instruments of financial engineering through an improved oversight of private/public partnerships and of the “mix” of loans and donations.
The French response to the UN’s sustainable development goals: Indicators for monitoring and financing
By Laurence MONNOYER-SMITH
Déléguée interministérielle et Commissaire générale au Développement durable au Commissariat général au Développement durable du ministère de la Transition écologique et solidaire
and Vanessa LORIOUX
Cheffe de la délégation au Développement durable, ministère de la Transition écologique et solidaire
Laurence Monnoyer-Smith , interministerial delegate and general commissioner, Commissariat Général au Développement Durable, Ministry of the Environmental Transition; and Vanessa Lorioux , head of the Delegation on Sustainable Development, Ministry of the Environmental Transition France’s commitment to pursuing the UN’s sustainable development goals is discussed along with the interministerial organization set up for this purpose and the current state of work on indicators (in particular for financing these goals) and the assessment of implementation. The participation of stakeholders in French programs dovetails with the seventeenth goal on partnerships. An ad hoc committee at the Conseil National de l’Information Statistique (CNIS) organizes work on the indicators and will select the ones relevant for assessing our country’s public policies.
Luxembourg Green Exchange: the meeting place for ESG-conscious issuers and investors
By Chiara CAPRIOLI
Business Development Manager at the Luxembourg Stock Exchange and LGX Project Manager
In September 2016, the Luxembourg Stock Exchange (LuxSE) launched a unique platform entirely dedicated to green bonds. It is called the Luxembourg Green Exchange (LGX). Such was the success of LGX that, following a strong market push, in May 2017, the platform expanded to also include bonds that finance social and sustainable projects. It has the potential to rewrite the sustainable finance story.
The inclusion of Science, Technology and Innovation (STI) in Financing of the 17 Sustainable Development Goals (SDGs)
By Prof. Enrico GIOVANNINI, Dr. Françoise ROURE
University of Rome, “Tor Vergata”
The path towards the adoption in 2015 of the United Nations’ 17 sustainable development goals (SDGs) presented a historic and unprecedented opportunity to bring the countries and citizens of the world together to decide and embark on new paths to improve the lives of people everywhere. These decisions will shape the global course of action to end poverty, promote prosperity and well-being for all, whilst observing environmental and resources limits and addressing climate change.
Financing the UN’s sustainable development goals
By Philippe ORLIANGE
Directeur exécutif à la direction de la Stratégie, des partenariats et de la communication de l’Agence française de développement
Financing an objective is often considered to be an ordeal that puts a public policy’s credibility to the test. If the objective has been targeted without the necessary (financial) appropriation for reaching it, the policy, along with its decision-makers, risks losing credibility. The UN’s sustainable development goals translate, we might say, the policy objectives of nation-states, the aim being to enable all of humanity to live in peace and share in prosperity on an environmentally preserved planet. It is, therefore, logical to ask how these goals will be financed. It has been estimated that trillions of dollars are needed. Since the phrase “sustainable development” contains “development”, could the funds devoted to official development assistance not be tapped? But given that the latter amounted to $145 billion in 2016 (according to the OECD’s Development Assistance Committee), this boon would still fall far shot of needs. Were we to measure the success or failure of financing these goals by the trend in official development assistance, we would already know what to expect. Fortunately however, that is not the case…
Financing the UN’s sustainable development goals through the investments made for the ERAFP retirement fund
By Philippe DESFOSSÉS
Directeur de l’Établissement de retraite additionnelle de la Fonction publique (ERAFP), administrateur et vice-président de l’Institutional Investors Group on Climate Change (IIGCC)
Philippe Desfossés , director of the Établissement de Retraite Additionnelle de la Fonction Publique (ERAFP), administrator and vice-president of the Institutional Investors Group on Climate Change (IIGCC) The seventeen sustainable development goals adopted in September 2015 follow on the UN’s Millennium Development Goals. These new objectives set the course for the policies to be pursued during the next fifteen years. From 2000 to 2015, the UN’s Millennium Development Goals were a remarkable instrument for scaling back poverty. Given this, might the sustainable development goals respond to a real need? The answer is affirmative. By widening the radius of action of aid from all countries, these seventeen goals signal a significant shift from the millennium goals, which mainly centered around reducing poverty. Multilateral cooperation has come under criticism. Some politicians even think that a wall can cope with migrations. But how high a wall to stop greenhouse gases?
How to finance the sustainable development goal on clean water and sanitation by 2030?
By Gérard PAYEN
Conseiller Eau du Secrétaire général des Nations Unies (UNSGAB) de 2004 à 2015, membre du think tank (Re)sources
and Patrice FONLLADOSA
Président-directeur général de Veolia Africa et de Veolia Middle East, président du think tank (Re)sources et président du Comité Afrique de MEDEF International
Gérard Payen , advisor on water to the secretary-general of the United Nations (UNSGAB) from 2004 to 2015, member of the think tank (Re)sources; and Patrice Fonlladosa , chairman of the board and managing director of Veolia Africa and Veolia Middle East, president of the think tank (Re)sources and chairman of Comité Afrique, MEDEF International The planetary issue of water figures as the sixth of the UN’s seventeen sustainable development goals. This goal sets ambitious targets, such as universal access to drinking water, decontamination of the water supply, and the reduction by half of water pollution caused by human activities. But how to finance these targets? Devote a larger proportion of international aid to the water supply? Increase public budgets? Make users pay? Or even solicit private funding? As emphasized at the 2015 UN conference in Addis Ababa, no financial source should have priority in relation to the others; all forms of financing must be used. Furthermore, it is worthwhile improving governance and the economics of the water supply in order to attract more funding from banks and private sources. Governments must realize how necessary this is and adapt their policies to raising the funds necessary for reaching the sustainable development goal on water by 2030.
3 - Why and how civilians and entrepreneurs are acting in favor of the sustainable development goals
Improving the management of natural resources in order to reach the UN’s sustainable development goals: The Extractive Industries Transparency Initiative
By Asmara KLEIN
Docteure en science politique, auteure de La Coalition « Publiez ce que vous payez » (PCQVP)
The Extractive Industries Transparency Initiative brings together extractive firms, governments and nongovernmental organizations in the effort to inform the citizens of countries with oil, gas and mineral resources about the management of their nonrenewable natural wealth. This Initiative’s intent and method are in line with the UN’s sustainable development goals. The Initiative has successfully organized a genuine three-party dialog for releasing information on the extractive sector; and it has introduced the principle of transparency in an industry characterized by its opacity. The Initiative’s promise of citizen control (thanks to the disclosure of information) is yet to be fulfilled. This calls for paying more attention to the conditions of how the data made public are actually put to use.
Urbanization, a financing challenge for a sustainable world
By Douglas FINT
Former Group Chairman, HSBC
The transition to a smarter, lower-carbon way of living will need a rapid transformation of existing and future city development. Investors are willing to help fund this transformation if we can find the right approach to infrastructure finance. We are seeing new levels of ambition by local authorities. Achieving it will require integrated planning and investment from both public and private sources.
An efficient green tax system for the climate: Feedback from Sweden’s experiment
By Pierre-Alexandre MIQUEL
Chef du Service économique régional (SER) pour les pays nordiques
Julien GROSJEAN
Chef des secteurs Énergie-Environnement-Matières premières au Service économique régional pour les pays nordiques de la direction générale du Trésor à l’Ambassade de France en Suède
and Thomas STERNER
Professeur d’économie environnementale à l’Université de Göteborg
Pierre-Alexandre Miquel , head of the Regional Economic Service; Julien Grosjean , head of Energy-Environment-Raw Materials at the Regional Economic Service for Nordic Countries, Direction Générale du Trésor, French Embassy to Sweden; and Thomas Sterner , professor of Environmental Economics at Göteborg University Applying the Paris Climate Agreement calls for innovative, efficient, green economic tools. Sweden, a pioneer in setting carbon prices, has the highest green taxes in the world for sectors not covered by the EU’s Emissions Trading Scheme (ETS): a record of 120 €/tonne. This has helped reduce the country’s greenhouse gas emissions by nearly 30% since 1995. In the sectors covered by the ETS however, green taxes are very low; and emissions have increased slightly (unlike in France). A Social-Democratic government passed the “green tax shift” at the turn of the century. Tax reductions for lower-income households and charges to employers have neutralized the potentially negative effects in terms of redistribution. Experiments have been successfully conducted using innovative economic tools: green certificates for electricity from renewable sources, urban tolls and a NOx tax.
The sprouting of green bonds: Potential and limits
By Arnaud BERGER
Directeur du Développement durable du groupe BPCE (Banque Populaire et Caisse d’Épargne)
Since 2009, the climate issue has stimulated worldwide economic competition in markets for “green energy”. Issued to finance environmentally friendly projects, in particular for coping with climate change, “green bonds” are evidence of this new market, which spans activities from real estate to transportation and manufacturing. These bonds have the potential of speeding up investments by raising massive amounts of money in a short time. However, their growth has encountered two limits. A technical limit is to define “green investments” so as to avoid misuse and the windfall from “greenwashing”. The second, economic, limit has to do with how well green bonds, designed for big (infrastructure) projects, meet the demands of the green economy, which is mostly local in France and Europe. To make green financing, jobs and urban/rural planning converge, the choice must be made of a model for funding ‒ between the Anglo-American preference for capital markets and the European preference for the banking system.
Foundations in the financing of the sustainable development goal on health: The Mérieux Foundation’s approach
By Benoît MIRIBEL
Directeur général de la Fondation Mérieux, président du Centre français des Fonds et Fondations (CFF)
The UN’s ambitious sustainable development goals require new forms of international partnerships endowed with new sources of financing. How to reach the goals set for 2030 without innovating not only in technical matters but also in the implementation of the projects proposed by private and public stakeholders? How can sustainable development be imagined without “good health and well-being”, the third of the seventeen goals? And how to improve public health on the planet without progressing toward the first goal, “No poverty”? Of worldwide renown due to its considerable financing efforts in the health field, the Bill and Melinda Gates Foundation has drawn attention toward foundations, in particular their role in raising the funds needed to reach the sustainable development goals. In France, the number of foundations has doubled since 2010. There are now more than 2000 organizations, which differ in size and the sorts of actions they undertake. Most of them concentrate their activities in France or Europe, but several dozens of them have ample international programs, especially in the health field. Among them, the Mérieux Foundation has, for fifty years now, been actively fighting against infectious diseases in developing countries. For this purpose, it has adopted an approach based on reinforcing local capacities.
Financing development and tax evasion
By Lucie WATRINET
Chargée de plaidoyer sur le financement du développement au CCFD-Terre Solidaire
Owing to fraudulent practices and tax evasion, developing countries are losing more money than what they receive from official development assistance. It is urgent to take action. Tax revenues provide the surest source of income that governments can use to fund the public services (such as schools and hospitals) needed for development. They are essential for reaching the UN’s sustainable development goals. At present, wealthy lands, in the OECD and the G20, make decisions about fighting against tax fraud by private persons or tax evasion by multinational corporations. They do not necessarily take account of the problems specific to developing lands. It is crucial to set up, within the United Nations, a place where each country’s voice can be heard and to see to it that the rules and regulations adopted are understood and accepted by all ‒ an indispensable condition for putting an end to tax evasion and fraud.
Philanthropic capitalism, a sort of revival of international solidarity
By Marc LÉVY
Directeur de la prospective du GRET (Groupe de Recherche et d’Échanges Technologiques), ONG internationale des professionnels du développement solidaire
A phrase that seems to be an oxymoron prodded the author to devote thought to the concept of “philanthropic capitalism”. A brief history of philanthropy brings to light what seems like a revival that, starting in the late 1970s, arose as several players in the globalization of the financial sector turned to philanthropy. Philanthropic capitalism first came under discussion in a 2006 article on Bill Gates in The Economist. How is the new geopolitical situation in the world related to it? By addressing the issue (underestimated by the international community) of social bonds and solidarity, philanthropic capitalism is more a symptom of the planet’s worrisome state than a remedy for it. A few conclusions are drawn about trends in “international solidarity”. Philanthropic capitalism can contribute to this solidarity but under certain conditions.
The UN’s sustainable development goals and the financial sector: The experience of the Caisse des Dépôts
By Maria SCOLAN
Directrice de projets climat à la direction de la Stratégie de la Caisse des Dépôts
The UN’s sustainable development goals propose a universal grid of interpretation of what the Caisse des Dépôts has, in the French tradition, called the “general interest”. The adoption of these goals by the international community opens for this public financial institution the opportunity to foster its approach to assessing the economic and social impact of its actions. The Caisse des Dépôts has the role of inventing innovative tools and attracting private financiers in quest of utility toward the sustainable development goals.