Source: Small Island Developing States
26 September 2019: A task force of the UN Secretary-General issued an interim report that finds the digital revolution in financial technology (“fintech”) presents significant opportunities to accelerate SDG financing, including through providing more control to citizens. The report finds that digitalization is already supporting SDG financing, such as through green and sustainable development bonds, and it shares three ways fintech can shift financial systems towards citizens to advance sustainable development.
UN Development Programme (UNDP) Executive Director Achim Steiner and the retired CEO of Absa Group Ltd., Maria Ramos, co-chair the UN Secretary-General’s Task Force on Digital Financing of the SDGs, a multi-sector, public-private consortium of 17 global leaders tasked with developing a concrete, actionable set of recommendations on how to harness the digital revolution to advance the SDGs. To prepare its report, the Task Force drew upon commissioned research, ideas from a global Call for Contributions, and a series of “think shops” held in cities around the world.
The report titled, ‘Harnessing Digitalization in Financing the Sustainable Development Goals,’ identifies three ways in which fintech could shift “the center of gravity of the financial system towards the citizen.” First, fintech can increase the quality and user-friendliness of financial information and empower citizens in their financial decisions, from their roles as borrowers and savers to consumers and pension policyholders. Second, fintech helps reduce financial intermediation that does not add value for consumers. Third, fintech offers an opportunity for collective action among citizens in their financial lives, ranging from platforms like crowd-funding to shareholder action. The report also highlights the need for robust governance innovations to ensure digitalization supports the alignment of finance and money with citizens’ interests and sustainable development.
The report also outlines the risks in using digital financing to advance the SDGs, such as by deepening the digital divide by leaving behind people who lack the necessary infrastructure to join the digital revolution, thus reinforcing existing patterns of exclusion and discrimination. Additional challenges include data privacy and risks of increased money laundering, fraud and illicit financial flows (IFFs). To minimize these risks, the report that regulatory capacity must keep pace with the speed of the digital revolution.
The Task Force presented the report on 26 September 2019, on the sidelines of the UN General Assembly’s (UNGA) high-level week. Steiner highlighted the potential of digitalization to advance SDG financing through citizen choices, saying the “demand is there, among citizens all over the world, to direct financing flows towards green and other sustainability-related targets.” He said the digital revolution presents more realistic opportunities to direct financing flows towards sustainability-related targets at a meaningful scale.
The Task Force will incorporate reactions and feedback to the interim report, and present a final version during the second quarter of 2020. In the coming months, the Task Force plans to focus on, inter alia:
- identifying opportunities for advancing digital approaches to mobilization and effective use of finance in support of the SDGs to address both supply and specific aspects of sustainable development, including gender and climate;
- supporting governance innovations to overcome barriers in harnessing digitalization for SDG financing while mitigating risks;
- building national and regional capabilities to accelerate development of SDG-aligned digital financing and to improve alignment of international developments in digital financing and money with domestic priorities;
- identifying needs for international cooperation to overcome barriers and risks, develop critical capabilities and realize opportunities; and
- measuring progress in harnessing digital SDG financing.
The Task Force is continuing to invite contributions in these areas to inform recommendations and catalyze initiatives that will increase the effective harnessing of digitalization for SDG financing. [UNDP Press Release] [Task Force Press Release] [Publication: Harnessing Digitalization in Financing the Sustainable Development Goals] [Executive Summary] [SDG Knowledge Hub Story on Launch of task Force]