The United Nations’ sustainable development goals (SDG) face a financing gap of up to $100 trillion and that engaging businesses an industries not committed to the goals could bring in $12 trillion in business opportunities related to the effort, according to a new report by Force for Good.
Closing the significant funding gap will require financial institutions and businesses as well as others to work together if there is a chance to meet the 2030 goal, the report says.
Nearly 10% of the global GDP will be required annually to meet the SDG, which is estimated to need as much as $142 trillion to be properly funded. An additional $200 trillion to $220 trillion is needed to fund SDGs through 2050, with an additional $80 trillion needed for energy transition.
The Force for Good report says the SDG funding gap is far beyond any one stakeholder to handle and will need cooperation between many industries as well as governments and individuals. It says the gap will only widen as more industries make sustainability transitions.
While investing in ideas such as SDGs can benefit industry and help them grow, the cooperation across industries and regions could be slow to arrive. More than half of European companies are said to make the UN’s SDG objective a priority, while only a quarter of US companies feel the same. More cooperation regarding SDGs is a key to close the funding gap, the Force for Good report says.
The report says the financial industry has stepped up toward the goals by investing a record $2.1 trillion in 2020 and committing $9.5 trillion by 2030. Additionally, 86% of the top financial institutions are committed to helping industries achieve carbon net zero objectives and have invested $88 trillion toward that goal.
The finance industry manages or allocates more than 85% of the gross liquid assets globally, governments, including central banks control up to $143 trillion in liquid assets and non-financial corporations control more than $156 trillion. The amount of money held with varying stakeholders is a key reason for them to work together to help reach the lofty goals, according to the report.
Most of the current SDG spending is focused on hitting net zero goals, with 44% of funds going toward that area, which constitutes approximately 20% of the funding requirement across all the SDGs. Most of the capital is now focused on advanced economies, according to the report, meaning developing areas have the biggest shortfalls.
The report says to help achieve SDG 83% of the global energy still being produced by fossil fuels still needs to be replaced. It also says cleaning and renewing cities and industries can enhance the SDG. The SDG effort can be seen as investments offering financial and non-financial returns, especially if all fields support the idea, the report says