Financing Sustainable Development Post-2015: Putting the Elements in Place

Luca Etter
Program Manager Private Sector and Development Finance at Swiss Agency for Development and Cooperation

10 February 2015 - The first week of negotiations about a new framework for financing sustainable development post-2015 proved that there is consensus on the ambition but a lot of open questions regarding the elements needed to get there.

At the beginning of this year, the Co-facilitators of the Financing for Development (FfD) process presented an Elements Paper which formed the basis for the first of three drafting sessions which took place from January 27 – 29, 2015. The session provided a first opportunity to get a sense of what to expect in the months leading up to the Addis Ababa conference on July 13 – 16, 2015.

Financing for Development – Elements Paper

A framework for a more sustainable financial system

The task at hand seems overwhelming – identifying ways to finance the new Sustainable Development Goals (SDGs) that include such noble objectives including ending poverty in all its forms everywhere (Goal 1); achieving gender equality and empower all women and girls (Goal 5); or ensuring sustainable consumption and production patterns (Goal 12). But the conference in Addis Ababa will not be a pledging conference where someone will provide a bill and countries will decide on who pays what. Rather, Addis Ababa is about finding an agreement between more than 190 countries on how the allocation of finance flows can be brought in line with sustainable development objectives – after all, existing global savings far outweigh any estimation as to how much it would cost to make the SDGs a reality. In Addis Ababa, Members States therefore will have to discuss policies and incentives as much as finance flows; and will have to look at all available sources of finance: domestic and international, public and private.

Open Working Group proposal for Sustainable Development Goals

Swiss Priorities for an ambitious Addis Ababa consensus

For Switzerland, it is clear that each country has the primary responsibility for its own sustainable development and thus has to ensure that domestic policies and regulations are in line with sustainable development objectives. A functioning business environment that allows enterprises to be formed and expand, that is free of corruption and where the state guarantees property rights, educates its workforce, and encourages economic activity and innovation is a fundamental pillar of any development, let alone sustainable development. Each country should in particular ensure that it avoids creating perverse incentives that undermine sustainable development, such as fossil fuel subsidies which lead to an overconsumption of carbon emitting technologies while hampering the development of innovative and green alternatives.

But the international environment matters, too. If countries are unable to generate revenue for basic public services through an efficient and fair tax system because e.g. multinational enterprises avoid paying taxes in the countries they are operating, the state lacks the fiscal space to implement policies and programmes to achieve Sustainable Development Goals. Other key issues of great importance to sustainable development financing – such as trade, sovereign debt or financial regulation – also require a coordinated international effort. Switzerland actively participates in these discussions and is striving for better coordination and more coherence between the works of the different international fora, each with a clear mandate.

Swiss Working Paper on Sustainable Development Financing Post-2015

It’s getting political

The first drafting session provided Member States with the opportunity to present their key priorities for the Addis Ababa conference. While many issues will certainly lead to heated discussions in the negotiations to come, countries have to keep in mind that this conference is about more than the sum of its elements. In the pivotal year 2015, with the Summit in New York on the Post-2015 Agenda in September and the climate conference in Paris in December, Addis Ababa will be the first big international conference of the year in which political leaders will have to commit to reenergize multilateral action to address global challenges that affect all of us. From poverty to climate change to increasing inequality between and within countries, only coordinated international collaboration – between nations but also between citizens and businesses, academia and NGOs – can put the world on the path towards a more sustainable future.