The development community spends a lot of time talking about private investment in the Sustainable Development Goals (SDGs). Traditionally, this talk has been centered on the why – why private investors should come to the table, why it is both their duty and in their best interest to join us. More recently, this conversation evolved to include the how – how we can work to attract private investors to this end. Yet with only eleven years remaining before time runs out for SDG action, it is imperative that we shift this focus to the outcomes, to the what of SDG financing, to truly make an impact. This shift is the topic of the second installment of our series “The Road to SDG Financing,” which explores trends, challenges, and solutions related to boosting private SDG financing in the developing world, with a focus on Latin America and the Caribbean (LAC).
Through research and in-depth conversations with private investors, we at the IDB Group saw a series of questions emerge. What sectors and which countries need private financing the most? What activities can investors fund if they want to tangibly move the needle on SDG impact? What can be measured to ensure private dollars are being allocated in a way that maximizes results? And critically – what must be communicated about investment opportunities to inspire private investors to action? These are not easy questions to answer, but we have found that the solution lies, in very simple terms, in SDG alignment.
When the SDGs emerged in 2015, they were intended as a roadmap to guide and align the efforts of all actors seeking to drive positive change. Unlike their predecessors, the Millennium Development Goals, this roadmap has achieved unprecedented success in capturing the attention of non-traditional development actors, private investors included, and providing them a lens through which to analyze development that is universally recognized, measurable, and clear.
Accordingly, at the IDB Group we recognize that engaging private investors in the region’s development requires us to “talk the talk” – or to consistently and exclusively speak this language of the SDGs. So far, this has not been the norm among multilateral development banks, which are used to setting their own standards for how they discuss and address development. Yet the widespread adoption of the SDGs, particularly among private sector audiences, requires that we seek complete alignment with these Global Goals so that investors can understand our work, our impact, and our contributions to driving the 2030 Agenda forward.
At the same time, engaging investors hinges on the capacity of development actors to “walk the walk” on SDG financing. This requires assessing and measuring development challenges and opportunities exclusively through an SDG-focused lens. This will enable actors to indicate just how dire SDG financing needs are in a given country or sector, and to quantifiably and qualitatively assess our SDG impact in the region.
The IDB Group’s efforts to do both – to talk the talk and walk the walk on SDG financing – have manifested in an impact visualization tool in terms of SDGs for infrastructure investments in the region. Currently under development in collaboration with the Sustainable Development Solutions Network (SDSN), an initiative of the United Nations and the Earth Institute at Columbia University, this tool will be used to guide investors toward investment opportunities that can move the needle on key infrastructure-related SDGs. This is merely one approach towards actionable and proactive SDG alignment, but it is one that can revolutionize how private investors engage in the LAC region’s development story.
Through tools like this one, which is expected to launch later this year, investors will be better able to understand how concretely their investments can move the 2030 Agenda forward, and better able to recognize the value of investing in the LAC region. Its creation may only represent a few steps forward in walking the walk, but we expect it will be a leap forward in mobilizing investors to finance the SDGs in Latin America and the Caribbean.
Yet while the LAC region is ripe for private investment and ideal for piloting innovative SDG financing schemes, much of the SDG financing narrative is global in scope and disproportionately focused on other developing regions. In our next installment, we will discuss just why investors should be sure to look to LAC if they would like to generate returns of all kinds – social, environmental, and financial. Don’t miss it.
Matias Bendersky is Chief of the Resource Mobilization Division at the Inter-American Development Bank (IDB), where he is responsible for forging and expanding the IDB Group’s strategic alliances with partners from the public, private, non-profit, foundation, and academic sectors. He leads a team of professionals that work to identify co-financing opportunities and mobilize resources. In addition, Mr. Bendersky’s team works to explore how to best leverage blended and innovative financing instruments as vehicles for achieving the sustainable development agenda in the region. Prior to joining the IDB in 2007, Mr. Bendersky worked for the World Bank in various sovereign guaranteed operations. Previously, Mr. Bendersky worked for 6 years as a corporate and transactional attorney in both Argentina and the United States. Mr. Bendersky holds a JD from the University of Buenos Aires and a Joint Degree Masters from Northwestern University’s Kellogg Graduate School of Management and Law School in Chicago.