Report from public/private consortium reflects months of intensive global consultations, calls for policy and governance to empower “citizen financiers”
United Nations Development Programme (UNDP) chief Achim Steiner and Maria Ramos, recently retired chief executive of Absa Group Ltd., today announced release ofHarnessing Digitalization in Financing the Sustainable Development Goals. Mr. Steiner and Ms. Ramos co-chair the 16-member United Nations Secretary-General’s Task Force on Digital Financing of the Sustainable Development Goals (the Task Force); Harnessing Digitalization is the Task Force’s interim report of findings to be presented and discussed today during the 74th United Nations General Assembly which takes place in New York.
The report’s key takeaway: the digital revolution in financial technology (fintech) offers major opportunities to accelerate financing of the Sustainable Development Goals (SDGs) — primarily by putting more control into the hands of citizens. The report points out that ordinary citizens are already in fact the world’s financiers. Collectively, the taxes they pay, the purchasing decisions they make, and their savings and investments shape the world economy. Despite this collective power, however, at the individual level, most people experience the financial system as something difficult to understand, much less to influence. Harnessing Digitalization describes three disruptive ways that fintech can shift the center of gravity of the financial system towards the citizen: first, by increasing the quality and user-friendliness of relevant financial information; second, by reducing financial intermediation that does not add consumer value; and third, by presenting citizens with platforms for collective action, whether through crowd-funding or through consumer, employee, or shareholder actions.
There is already precedent for digitalization to advance financing of the SDGs through citizen choices. “The issuance of more than half a trillion dollars of green and sustainable development bonds was made possible in part by the availability of affordable, reliable data thanks to digitalization,” said Mr. Steiner who headed the United Nations Environment Programme from 2006 to 2016. “The demand is there, among citizens all over the world, to direct financing flows towards green and other sustainability-related targets. What we’re seeing now, thanks to the digital revolution, are more realistic ways to make that happen at meaningful scale.”
Among the ways fintech can advance pursuit of sustainability at scale is its well-known role in expanding financial inclusion, especially to savings accounts; its role in mobilizing domestic savings into long-term investment; the enhancement to government revenue by making it harder to evade taxes; and through improved measurement and management of risks and impacts. Harnessing Digitalization calls for systematic international cooperation, including on the part of the United Nations, to leverage these opportunities along with national- and regional-level cooperation to accelerate SDG-aligned digital financing and to shape incentives for market-led innovations.
Along with the opportunities to use digital financing to advance the SDGs, Harnessing Digitalization outlines the risks. These include a deepening of the digital divide, whether by leaving behind altogether the people who lack access to necessary infrastructure or through algorithmic biases. The report also details the big unresolved issues around data privacy and the risks of fraud, money laundering, and illicit financial flows. Throughout, the report acknowledges the urgent need for robust regulatory capacity to keep pace with the speed of change.
“As the digital revolution accelerates, it becomes harder even to define what is ‘a bank’ much less to regulate it,” said co-chair Maria Ramos. “The need for smart financial policies, regulations, and standards has never been greater. The Task Force recognizes that for all its enormous potential, digitalization will not automatically empower citizens in financing decisions. The outcome will depend on international leadership with a clear sense of shared purpose. We can only achieve the promise of digital financing—and avoid its risks—through meaningful, sustained engagement between the public and private sectors.”
The Task Force itself is one such public/private partnership (see below). The report drew upon the collective wisdom of its members along with ideas gleaned from a global Call for Contributions, a series of “think shops” held in more than a dozen cities around the world, and commissioned research.
The Task Force will incorporate feedback and reactions to the interim report after the UN General Assembly and will present the final version during Q2 2020.
ABOUT THE INTERIM REPORT
Harnessing Digitalization in Financing the Sustainable Development Goals reflects the priority areas for investigation to which the Task Force members agreed during the Inaugural Meeting in Davos (January 2019). Those priorities were articulated in the March 2019 Framework Document. Harnessing Digitalization was co-authored by the senior advisor to the co-chairs and by the director of the Task Force secretariat.
ABOUT THE TASK FORCE
The United Nations Secretary-General’s Task Force on Digital Financing of the Sustainable Development Goals (“the Task Force”) is a multi-sector, public/private consortium of global leaders convened by the United Nations Secretary-General in November 2018. The Task Force has been mandated to put forward a concrete, actionable set of recommendations for ways that the digital revolution which is transforming the world’s financial ecosystem might be harnessed to advance the Sustainable Development Goals. Along with the deep expertise of its own membership, which includes CEOs of commercial banks, stock exchanges, tech entrepreneurs, finance ministers, central bank governors, and other leaders, the Task Force is aggressively crowd-sourcing the best ideas about the digitalization of finance through a global Call for Contributions, a series of “think shop” convenings in cities around the world, and an ambitious research agenda carried out by partner organizations including Refinitiv (formerly Thomson Reuters), Accenture Development Partners, and the Sustainable Digital Financial Alliance.