The Netherlands are Building Highways to SDG Investing - And now for the Projects!
On 16 December 2016, 21 signatories - amongst which the largest Dutch banks, insurance companies, pension funds, as well as Impact Summit Europe, PYMWYMIC and VBDO - presented the Dutch SDG Investding Agenda (SDGI). It is meant to serve as concrete recommendations for SDGI-action. The agenda identified at least four areas of action:
Catalyse SDG Investment through deployment of blended finance instruments (ie. a mix of private and public funding instruments);
Mobilising retail-oriented impact capital, in such initiatives as Oikocredit, FMO Privium Impact Fund and Triodos Multi Impact Fund;
Stimulating Data Standardisation: further developing standards and measurement instruments for the effectiveness of investing in impact projects;
Ensuring a Supportive Regulatory Environment.
This is a major step forward, at least from the Dutch perspective. However, the report does not forget to remind us of the required investments to achieve the SDG's by 2030: USD 5-7 trillion annual investment. The Dutch initiative will, hopefully, change the mindset of major financial and industrial players in the Dutch market. The world, however, is larger than The Netherlands alone.
And furthermore, what investable projects are required in order to spend all that money wisely? In order to satisfy the relevant stakeholders (pensioneers, shareholders, insured parties), the private part of this blended finance initiative, eventually, requires a healthy return on investment.
"Investing in SDGs" is not a commodity. It calls for courage, innovation, the forging of new and unexpected partnerships, as well as vision in order to develop the projects needed. Examples of these are, for instance, found in Ecosystems of Shared Value as described by Mark Kramer and Marc Pfitzer in Harvard Business Review Oct 2016, p 81,89. Or take a look at the landscape restoration projects as developed by Commonland. Using trees based on the innovative COCOON planting technology from Life Land Company. Or take a look at the production of mobile phones from Fairphone. Why not try eating chocolate bars from Tony Chocolonely. Or support the work of PharmAccess in making health markets work in Africa. Or investing in WakaWaka Solar products. Or by supporting Terre des Hommes in their fight against child labour issues in the Indian mica industry and the need for immediate interventions. Mica is found in metallic car paint and in make up, so many of us use it, not knowing under what extreme conditions the raw material was being unearthed.
Eventually, business cases need to be developed to create (and pay for) coastal water protection in such vulnerable deltas as in Bangla Desh and Jakarta.
Energy transition is required to stop global heating. This may require enormous investments in solar technology.
Investments in innovative micro-finance projects are necessary to empower the inhabitants of remote and rural areas to develop their own agricultural businesses.
Eventually, in many countries investment in transport infrastructure is an absolute prerequisite to enable farmers to bring their produce to relevant markets, so they can pay for the development of their villages, education for their children and good health for everyone involved. The development of resilient infrastructure is key to the achievement of the SDGs by 2030, as the International Institute for Sustainable Development, in an article by Liesbet Casier (Why Infrastructure is Key to the Success of the SDGs) argued in September 2015. She reckons that a total of USD 57 trillion is needed by 2030, or US$ 3.4 trillion per year, for infrastructure investment where there is currently a finance gap of US$ 500 billion per year (S&P, 2014). The SDGI initiative as well as innovative approaches to sustainable public procurement will be critical to their success.
There is money in abundance. Now, good projects and credible and totally new business cases (some of those with a somewhat longer horizon than investors are used to) are required to spend that money effectively, with real impact.
On 25 January, 2017, at a mini-conference in Lima, Perú, for the Ministries of Finance and Economic Affairs, sponsored by the Inter-American Development Bank, The Faithful Goose will discuss what public governance systems are required in order to achieve this.