The Critical Role of the G20 for Advancing Sustainable Development for All
The world economy is growing at its fastest pace in several years, and the short-term trends for growth and employment are promising in many countries. We also see, however, clear signs and risks that could derail this trajectory, potentially leading to negative consequences for many emerging economies and developing countries.
Adding to these economic factors, challenges such as climate change put longer-term development prospects at risk. The 2030 Agenda for Sustainable Development, a universal agenda that is meant to shape our collective future, provides a blueprint to manage these risks towards sustainability and inclusion.
Policy choices currently being made that steer us away from multilateral approaches may appear beneficial in the short term. But in the long term, they could put us in a downward spiral. While decisions are made by a few, consequences will be borne by many, if not all.
G20 countries have an individual but also collective responsibility to find multilateral solutions to advance sustainable development for all. The financial architecture must play a key role in creating economic gains through greater stability and resilience, but also in the social and environmental realms, including by reducing inequalities. Objectives such as “financial stability” and “stable growth” should not be seen as ends in themselves but rather as instrumental in advancing sustainable development.
I would like to highlight three policy areas where the G20’s voice would be particularly relevant.
G20 economies bear a special responsibility to strengthen multilateral and cooperative approaches to taxation to curtail harmful tax competition. It is also important to ensure that tax reforms pay greater attention to their spill over effects, avoiding tax uncertainty. Similarly, taxation of economic activities in the digital space requires collective action towards a coherent set of international tax rules. Such rules need to create policy space for developing countries.
A second area is debt sustainability. Debt risks have risen rapidly in many developing countries in recent years. A growing number of low-income countries have tapped international debt markets, and foreign-currency denominated corporate debt is high in several emerging economies. Many have been experiencing currency depreciations, making these countries particularly vulnerable to an abrupt tightening of global liquidity conditions.
It is critical to design financial instruments that respond to shocks in ways that disperse more quickly and that have built-in incentives for risk reduction and prevention. Innovative instruments – such as state-contingent debt instruments – could, over time, enable countries to better cope with shocks and have a more predictable flow of resources, particularly in light of the risks of climate change-induced disasters. The G20 could take steps to realize their potential, including by using them in their own lending and development cooperation efforts.
Sustainable finance is a third area. The work of the G20’s Sustainable Finance Study Group, building on the work supported by the United Nations over several years, can make an important contribution to advancing sustainable finance.
Corporations have progressively incorporated environmental, social and governance elements into their reporting and their corporate management, although often on ad-hoc basis and mostly through unaudited self-reporting. There is a need to agree on global standards that financial products need to meet in order to be marketed as “sustainable.” The UN could contribute to identifying minimum, sector-specific sustainability criteria that companies should be disclosing, thereby introducing greater standardization in sustainability metrics.
The United Nations is committed to working with the G20 very closely in ensuring that we promote collective action not only to diagnose but also to mitigate risks and create an enabling environment for the timely realization of the 2030 Agenda and the Sustainable Development Goals. In addition to their collective actions, G20 countries can lead by example by showing how they are adopting economic and financial policies domestically that are consistent with the SDGs.