For most of the 7.0 billion people on the planet, global institutions are remote, far removed from their day-to-day existence. Yet, our global institutions matter.
They shape the global systems - such as international trade rules - that will enable the more than 3.0 billion poor people worldwide, who live on less than about 20 yuan a day, to rise out of poverty.
In 2015, the world's leaders agreed on the transformative 2030 Agenda for Sustainable Development, which laid out a path to shared prosperity and sustainability. But implementing the 2030 Agenda requires a fundamental shift toward sustainability in our financial systems.
The global financial architecture must enable trade and capital to flow across borders in a way that is stable and sustainable. This would help fund necessary investments, including in resilient infrastructure, and help put countries on sound financial footing. The architecture should also protect against shocks, but allow rapid responses to shocks when they do occur.
There is some progress to report. A joint assessment of financing global sustainable development, just completed by the United Nations - in collaboration with other international institutions, including the International Monetary Fund (IMF), World Bank, and World Trade Organisation (WTO) - finds that private sector interest in sustainable finance is growing.
Investors gradually realise that the way corporations manage environmental and social risks can impact financial performance. Sustainable development is also increasingly incorporated in public budgets and development cooperation.
But these changes are not happening at nearly the required scale, nor with the necessary speed. For example, annual spending on education in the poorest countries alone would need to more than triple to achieve universal education aspired to under the 2030 Agenda.
The gap on infrastructure financing in developing countries remains on the order of hundreds of billions of dollars. In today's interconnected world, major challenges cannot be solved by countries acting alone. Rather than retreating from multilateralism, the international community must strengthen collective action.
International trade has made a significant contribution to economic growth and development. When we work together, we can achieve great things for the good of all people.
The Belt and Road Initiative is an example of how countries are working together to find new paths to prosperity. The resulting infrastructure will enhance connectivity between Asia and Europe, and expand connections with Africa and South America. It provides important opportunities for countries to deepen cooperation and deliver sustainable infrastructure.
Achieving sustainable development - particularly eradicating poverty, reducing inequality, and combatting climate change - requires a long-term perspective, with governments, the private sector, and civil society working together.
Yet most private capital markets are short-term oriented and put pressure on corporate executives to demonstrate profits on a quarterly basis. A more uncertain world begets even more short-term behaviour. Private businesses hesitate to commit funds to long-term investment projects if economic prospects are unclear. During periods of financial insecurity, households often focus on their immediate needs.
If the Belt and Road Initiative could take a long-term perspective, it will help to build long-term, stable and sustainable financing into the multilateral system. It can be at the forefront of efforts to counter short-term behaviour.
Aligning both private and public incentives with sustainable development, and better measuring the impacts of investments and policies on sustainability, will further our global efforts. Private financial markets in China, like those in many other middle-income countries, are growing in size and importance.
If markets are to become a tool that promotes sustainability, rather than short-term speculation, the policies need to be carefully designed. For example, governments can price externalities, such as the cost of environmental pollution, ensuring that the true costs of investments are recognised and considered.
Requiring more meaningful disclosure by corporations on social and environmental issues can help. According to a KPMG survey of about 5,000 companies from 49 countries conducted in 2017, 75 per cent now publish corporate responsibility reports and 60 per cent include some sustainability information in their financial filings.
Their efforts should be further encouraged so that some internationally recognised standards in sustainability reporting could be agreed in the future. Countries can also promote long-term investing by supporting efforts to build indices for stock markets that includes companies with sustainable business practices.
China also blazes the trail in green finance. The green credit guidelines, issued by the China Banking Regulatory Commission in 2012, is a pioneer example of standards that promote loans to more climate-friendly projects.
Moreover, China is a leader in green bond issuances. Lessons learned by China and others can be shared through international platforms, such as the United Nations, to find synergies and strengthen policy frameworks.
At this time when greater global cooperation is needed, the multilateral system is under stress because of a backlash against globalisation in some parts of the world. Initiatives like Belt and Road can and should demonstrate the positive power of global cooperation.
It can help reshape both national and international financial systems in line with sustainable development. If we fail to do so, we will fail to deliver sustainable development for all. The very future of our planet is at stake.
LIU Zhenmin is Under Secretary General for Economic and Social Affairs, United Nations
Inter Press Service
