New financing for SDG sectors down 10%: World Investment Report 2024 | News

The United Nations Conference on Trade and Development (UNCTAD) has released its annual assessment of trends in foreign direct investment (FDI), measures to improve its contribution to development, and global value chains and their impact on development. The report found that global FDI fell by 2% to $1.3 trillion in 2023, while investment in SDG-related sectors fell by 10%.

The World Investment Report 2024, titled “Investment Facilitation and Digital Governance,” said that amid a challenging outlook for foreign direct investment (FDI) in 2024, “moderate growth appears possible for the full year” thanks to easing financial conditions and facilitating investment.

The report calls on countries to “promote investment by creating a transparent and streamlined environment through business facilitation and digital government tools” and on institutional investors to “increase foreign direct investment flows into infrastructure projects, especially in developing countries, to support long-term economic growth and stability.”

According to the report, “tight financing conditions in 2023 led to a 26% decline in international project financing,” which plays a major role in infrastructure investments in electricity and renewable energy, among others. This led to a decline in investment in SDG-related sectors of more than 10%. Agri-food systems and water and sanitation attracted fewer internationally funded projects in 2023 than in 2015, the report emphasizes.

In his foreword, UN Secretary-General António Guterres emphasizes that insufficient financing for the SDGs is hampering the implementation of the 2030 Agenda for Sustainable Development, especially in the least developed countries (LDCs). “We need urgent action to remove obstacles and ensure a transparent, streamlined investment climate for sustainable development,” he writes.

The report further finds that the pace of growth of SDG investments through sustainable financial products in global capital markets is slowing. For example, sustainable bonds grew only slightly in 2023, while inflows into sustainable investment funds fell by 60%.

The report describes the role of digitalization in developing countries as a stepping stone to broader implementation of digital government, which can strengthen weak governance and institutions and improve investment flows. It recommends a “bottom-up” approach to digital government tools, starting with core business services and gradually expanding to more institutions “to capture economies of scale and scope and extend the benefits to all businesses.”

Other recommendations include:

Countries and institutions encourage investment regimes consistent with the Sustainable Development Goals;
Governments promote investment in sustainable development projects, including through external investment promotion measures and the provisions of international agreements;
Institutional investors are setting more ambitious goals for divesting from fossil fuels and increasing investment in renewable energy;
Systematic action should be taken to combat greenwashing, including clear product standards, accurate sustainability disclosure, external audits and third-party assessments.

The report was published on 20 June 2024 ahead of the July session of the UN High-Level Political Forum on Sustainable Development (HLPF), where “partnerships for the Goals” is one of five Sustainable Development Goals under in-depth review. (Publication: World Investment Report 2024: Facilitating Investment and Digital Government) (Executive Summary) (Online Report) (UNCTAD Press Release) (UN News Article)