The following is an edited excerpt from “The Trillion Dollar Shift” by Marga Hoek (Business for Good, 2018).
There is a growing need for the world to mobilize capital in the direction of achieving the SDGs. The investment landscape shows a large gap between the amount of capital it will take to achieve the SDGs by 2030 and the financial resources from government and development aid that are currently available.
Therefore, private capital is urgently needed. By using development finance and philanthropic funds strategically to mobilize and leverage private capital, we can propel business and create market opportunities for a more sustainable world.
From billions to trillions
To meet the investment needs of the SDGs, the global community must change the discussion from billions to trillions. There needs to be a trillion dollar shift in investments of all kinds: public and private, national and global. The goals need an innovative capital mobilization with a global change of mindset, approach and accountability to create the transformation needed in both developing and developed countries.
Traditionally, the majority of development spending comes from governments and public resources, yet the largest potential is from private-sector investments. This is precisely the trajectory from billions to trillions, which each country and the global community must support together to finance and achieve the vision of the SDGs. Private capital is becoming an increasingly important tool for global development as well as one of the biggest business opportunities.
The market opportunities in industries such as food and agriculture, cities, energy and materials, and health and well-being alone could create 380 million new jobs by 2030. Although this presents unprecedented business potential, we still have a long way to go.
The allocation of capital in some areas, like infrastructure investments, currently only garners about 10 percent of its money from the private sector proving that there is ample room for growth in private sector involvement.
Traditionally, the majority of development spending comes from governments and public resources, yet the largest potential is from private sector investments. “Billions to trillions” signifies the realization that achieving the SDGs will require more than what is available in public money, it will demand that the private sector step in to fill the gaps. The financial system consists of tens of thousands of institutional participants — including regulators, banks, insurance companies, stock and bond exchanges — and billions of individual market participants — there is an immense opportunity to use this power of scale for profit and for good. (…)