To provide for the social and environmental outcomes that we need, our economy needs to be radically different. This transformation is critical for us to remain globally competitive, to create employment, to lift people out of poverty and to reduce inequality. We need to produce and consume different things and as a result, we need to alter our investment focus and the investment instruments and modalities that we use; collaboration between public and private partners is key.
Considering the Sustainable Development Goals (SDGs) as a framework for where we want to go is enlightening. The role of industry and infrastructure in achieving the SDGs is significant, but not always in the areas we expect, or we traditionally fund. We need to innovate to a significant degree if we are to achieve the SDG targets that will provide for a sustainable world.
The SDG that is obvious, and from which this session draws its name, is SDG 9: Industry, Innovation and Infrastructure.
Why does innovation appear in this SDG? Surely infrastructure investment is an established art? This need for innovation is driven by how different things need to be. This is especially true when we explore the details in other SDGs that relate to infrastructure and investment and identify areas with limited investor focus or track record. Key examples of relevant SDG targets include:
2.3: By 2030, double the agricultural productivity and incomes of small-scale food producers, in particular women, indigenous peoples, family farmers, pastoralists and fishers, including through secure and equal access to land, other productive resources and inputs, knowledge, financial services, markets and opportunities for value addition and non-farm employment
2.a: Increase investment, including through enhanced international cooperation, in rural infrastructure, agricultural research and extension services, technology development and plant and livestock gene banks in order to enhance agricultural productive capacity in developing countries, in particular least developed countries
4.a: Build and upgrade education facilities that are child, disability and gender sensitive and provide safe, non-violent, inclusive and effective learning environments for all
5.4: Recognize and value unpaid care and domestic work through the provision of public services, infrastructure and social protection policies and the promotion of shared responsibility within the household and the family as nationally appropriate
6.a: By 2030, expand international cooperation and capacity-building support to developing countries in water- and sanitation-related activities and programmes, including water harvesting, desalination, water efficiency, wastewater treatment, recycling and reuse technologies
7.a: By 2030, enhance international cooperation to facilitate access to clean energy research and technology, including renewable energy, energy efficiency and advanced and cleaner fossil-fuel technology, and promote investment in energy infrastructure and clean energy technology
6.6: By 2020, protect and restore water-related ecosystems, including mountains, forests, wetlands, rivers, aquifers and lakes
6.2: By 2030, achieve access to adequate and equitable sanitation and hygiene for all and end open defecation, paying special attention to the needs of women and girls and those in vulnerable situations
7.1: By 2030, ensure universal access to affordable, reliable and modern energy services
7.2: By 2030, increase substantially the share of renewable energy in the global energy mix
7.3: By 2030, double the global rate of improvement in energy efficiency
11.1: By 2030, ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums
11.2: By 2030, provide access to safe, affordable, accessible and sustainable transport systems for all, improving road safety, notably by expanding public transport, with special attention to the needs of those in vulnerable situations, women, children, persons with disabilities and older persons
11.5: By 2030, significantly reduce the number of deaths and the number of people affected and substantially decrease the direct economic losses relative to global gross domestic product caused by disasters, including water-related disasters, with a focus on protecting the poor and people in vulnerable situations
11.6: By 2030, reduce the adverse per capita environmental impact of cities, including by paying special attention to air quality and municipal and other waste management
15.1: By 2020, ensure the conservation, restoration and sustainable use of terrestrial and inland freshwater ecosystems and their services, in particular forests, wetlands, mountains and drylands, in line with obligations under international agreements
The timelines are urgent: 2030. The infrastructure that we need to invest in is far more diverse than we currently consider. We currently don’t have accepted models for investing in social housing, or wetlands or even in rural healthcare. The scale of the effort required is enormous. Solutions will have to be unique and collaborative.
The extent of the innovation required is emphasised by SDG target 9.5 which is focussed on Research and Development (R&D): “Enhance scientific research, upgrade the technological capabilities of industrial sectors in all countries, in particular developing countries, including, by 2030, encouraging innovation and substantially increasing the number of research and development workers per 1 million people and public and private research and development spending.” There is explicit recognition here that R&D is necessary to identify solutions that we may not yet have. How many financial institutions are comfortable funding this kind of early stage technology infrastructure, let alone the R&D?
In summary: the degree of transition required by the SDGs is enormous. It is not something that can be achieved by a single stakeholder and collaboration is key. While infrastructure (hard and soft) is critical we need to fund different kinds of infrastructure that we are used to and fund it in different ways.
Fortunately there are some really interesting innovations in the market from which we can learn. Please join us for a discussion as part of the Infrastructure Dialogues that focusses on the challenges of:
- Financing emerging solutions (even R&D)
- Financing natural capital
- Financing interventions that aren’t perceived to provide high capital returns
- Collaborative models across capital types (venture capital, grant, equity or debt), public and private origins, as well as international and local finance