By Citi GPS, Global Perspectives & Solutions
June 19, 2018
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Pathways to Success - A Systematic Framework for Aligning Investments
Although there is much in the world to be proud of, we still face enormous societal, environmental, and economic challenges. Even in this day and age, more than 2 billion people — a quarter of all humankind — lack access to even the most basic elements of life that most of us take for granted, such as clean water, sanitation, and energy, while 800 million people — more than one in ten of us — remain undernourished. At its most extreme, the picture is infinitely worse; 700 million people, again, almost one in ten of us, still live below the poverty line on less than $1.90 per day, a sum that many of us spend on a coffee without a second thought. More than 40% of children younger than age 14 (800 million) still lack access to a 'complete' education, and are denied the opportunity to reach their full potential. Beyond the obvious impact on their own lives, what benefits might almost a billion extra well-educated people bring to the world?
The 17 United Nations Sustainable Development Goals aim to tackle the challenges, issues, and injustices facing the world by 2030, but the goals themselves are complex. They are arguably all inextricably linked, with numerous feedback loops, not all of them positive. Trillions of dollars of capital wants to invest sustainably but struggles to translate an investment philosophy, which desires alignment with the SDGs, into a practical investment strategy given that complexity.
This report tries, as far as possible, to simplify the SDGs — to examine those interlinkages, to determine the driving forces and resulting benefits, and thereby determine a set of critical paths — our so-called 'pathways to success' — which can lead quickly and most effectively to the achievement of the goals. It allows us to identify who is best placed to do what, from the public sector to the private sector to the investment community, and what their route in might be. We examine the goals individually, attempting to lay out both the incremental financial cost/opportunity of achieving the goal, and the human benefit that might be gained by solving it. In a world of scarce resources, it also provides an indication of which paths might achieve the broadest human benefit for the least financial cost though this does not mean these are the most important — it is not by accident that all roads on our 'pathways to success' lead to the eradication of poverty.
We identify incremental physical investment needs or opportunities in water, energy, and the circular economy alone of $1.5 trillion per year, while social investment areas of education, health, and hunger add up to an annual incremental opportunity of $800 billion. To be sure, these are enormous sums, but much smaller than the sums of capital looking to invest sustainably and tiny in relation to the human benefits that could be achieved. We also examine the innovative financial instruments and frameworks needed to allow that capital to flow to aid in the achievement of the goals.
The SDGs represent the challenge of our generation but a challenge which we should embrace, as the benefits for those suffering most, as well as to the whole global community, would be immeasurable if we were to succeed. By identifying the lowest hanging fruit, the feedback loops, the critical paths, the scale of the opportunity in both human and financial terms, and who might do what, we hopefully break the sometimes daunting SDGs down into a roadmap — a framework which allows all elements of society, from policymakers, to corporates and the financial community, to set out in partnership down a pathway to a better, fairer, wealthier, more inclusive, cleaner, and more sustainable world that we can be truly proud to leave for our children.
Read the full report here.