The Sustainable Development Goals (SDGs) are a recent framework that defines the main goals to achieve sustainable development until 2030. The SDGs combine major social and environmental goals to achieve sustainable development and address environmental issues much more prominently to protect the life-support systems necessary for sustainable development. Furthermore, they connect sustainable development and sustainable business issues, such as responsible production and consumption, while still promoting economic growth to create decent workplaces. It is estimated that $5 to $7 trillion will be needed annually until 2030 to achieve the SDGs. The World Bank estimated that domestic governments would provide between 50 and 80 percent of the funding for the SDGs and that the remaining funds should come from investors. Hence, the SDGs might be an opportunity for the financial industry to further establish sustainability principles and to engage in financing sustainable development. To engage the banking industry in financing the SDGs, this paper recommends that the banking industry enhance current financial sector codes of conduct by integrating the SDGs; align existing sustainable finance strategies with the SDGs; standardize SDG accounting and reporting to identify strengths and weaknesses of, as well as risk and opportunities for, the banking industry in addressing the SDGs; and develop innovative financial products that address the SDGs. Furthermore, it recommends that governments and financial regulators align financial regulation with sustainable development and the SDGs; offer financial mechanisms to mitigate financial risks in addressing the SDGs; and align development banks with the SDGs.
The Financial Sector and the SDGs: Interconnections and Future Directions
CIGI Paper No. 201