A world society is emerging where nation states are dominant, but in a complex, multi-polar world in which the poles – including business, civil society, and multilateral agencies – are developing various forms of power through alliances and shared objectives (or even common enemies). In the global system that is emerging, economic growth and the technological advances that underpin it have to be geared to meet human ends. Global governance has to be built on three pillars which reflect this complexity: political vision; realistic goals; and operational strategies.
This is the sense of the UN Human Development approach, the OECD Better Life Initiative, and the UN 2030 Sustainable Development Agenda to which the G20 Hangzhou consensus lends support. Is the vision of global leadership as expressed by these bodies adequate to steer the world community out of the enduring crisis?
The 2030 Agenda implies a new relationship between the economy, nature, and society, and as such it has caught the mainstream political parties off balance. The Right is mainly on the economic leg; the Left on the social leg; the Greens on the ecological leg. The result is that the policy-making institutions, politically neutral, have a special responsibility. The OECD, in the nascent coalition of multi-lateral agencies, has the advantage of having pioneered its triangular policy paradigm almost since its foundation. This is now becoming a tripod, with governance at its apex.
The heart of the policy problem is that the economic, social and ecological systems have different logics. This means that policy coherence is both increasingly important and increasingly difficult. It has to be sought at all levels of decision-making, right down to cities and local communities where it is easier to achieve concertation between the stakeholders. At the level of the macro debate, policy coherence is complicated by the fact that the policy sciences are, by their very nature, silos. Economic, ecological, and social theory do not readily mix. Policy-makers can only get at the massive structural problems of today by systemic reforms which cross the boundaries of ministerial departments and the policy sciences. That is why systems thinking is needed for policy coherence.
This mutation in policy-making will not succeed if it remains the affair of a policy-making elite. Already, something like a popular movement appears to be building up. Way ahead of the policy-makers and the academics, people in cities, towns, and villages across the world are responding to the sustainability movement. For necessity is the mother of invention – as reflected in protest movements to avert climate disaster and to resist expropriation from historic “commons”.
Given the complexity of the goals of global governance, the leadership needs to explore the implications of alternative scenarios (futures) as a guide to today’s decisions. In that sense it has a pedagogical role, even rhetorical, since it engages in a “conversation” in and around possible decisions. Given the turbulence of the geo-political and geo-economic scene, its role is likely to become more important as predicting the future becomes more difficult while creating it becomes more necessary. And faced with the complex web of interactions between the SDGs, the context in which policies are formulated is vital. Success will depend on the extent to which, for example, “centres of government” are willing to collaborate.
There are two consequences. First, certain “chunks” of the SDG map are forced onto the policy agenda by the geo-political and geo-economic context. This is the case of the impressive commitments made at the G20 Hangzhou Summit, for example with regard to “a globally fair and modern international tax system”, green financing, energy collaboration, climate, inclusive and interconnected development, and illicit financial flows.
The second contextual reality is the need to pursue action in real-world decision-making contexts, national and sub-national. This is where the OECD can make a considerable contribution, because of its long-standing tradition of peer reviews, now extending down to the city, regional and local levels of public policy. The Multi-Dimensional Country Reviews of the OECD Development Centre are of particular interest in this regard.
Given the long and rocky road to the SDGs, regular monitoring of achievements and failures will be vital. This involves the publication of statistical indicators, an area in which the OECD has an important role to play. But more is at stake because sustainable development reflects a shift in opinion across the world. Policy-makers and citizens are in effect learning their way into the future, and emulation is an important stimulant for progress.
Progress is linked to security. After World War II, NATO and the OECD were the two arms of the Western strategy to provide security and prosperity. European economic and social progress was seen as the bulwark against Soviet communism, and the Marshall Plan was the instrument. Progress and security were thus linked. Today the progress-security nexus is quite different. The challenge of world progress – reconciling economy, nature and society – is much more complex. The security threats are more diffuse, ranging from nuclear conflict to climate change and terrorism.
The people of the world are now faced with living together on a finite planet, in an ever-expanding universe that they are beginning to explore. The fundamental challenge facing global governance is whether security risks and threats will undermine and overwhelm the immense power for progress that the new technological revolution brings. The SDGs can be part of the response if sustainable development, the Brundtland vision, becomes a popular movement. So too can the Hangzhou consensus, if the commitment of the major G20 powers to the SDGs extends to peace and security aspects of the UN 2030 Agenda.
The hope that this will be the case depends on whether, despite a certain amount of sabre rattling, a complementary force to economic interdependence is on the move. The great historical civilisations now appear to be embarked on a global process of convergence/competition. Interaction and mutual fertilisation in philosophy, culture, sport, education and travel are all everyday realities for the connected peoples of the world. On this fertile soil, a new global humanism could, in the long run, be the best shield against xenophobia, populism, and terrorism.
The creative society and the new technological revolution Issues paper by Ron Gass
50 Years of reconciling the economy, nature and society Ron Gass, OECD Yearbook 2011
NAEC and the Sustainable Development Goals: The Way Forward Mathilde Mesnard, OECD Insights
It’s not just the economy: society is a complex system too Gabriela Ramos, OECD Insights
Luiz de Mello, OECD Directorate for Public Governance and Territorial Development (GOV)
The approval of the United Nations’ Sustainable Development Goals (SDGs) in September 2015 provides a useful occasion to explore how countries’ multi-lateral reform and development initiatives, such as those in the areas of open government, can support and advance the ambitious aims of the SDGs. Linking the SDGs to broad public administration reforms will be particularly important given their complexity; consisting of 17 goals and 169 targets, they cover a wide range of topics that will help shape countries’ priorities for public governance reform in the coming years.
Indeed, this is particularly relevant for Indonesia. As the country is both a founding member of the Open Government Partnership and simultaneously played a leading role in the United Nations Post-2015 development design, Indonesia is well placed to be a strong advocate for open government reforms, and to link such reforms to other multi-lateral reform efforts.
The SDGs deepen and expand upon the Millennium Development Goals (MDGs) and set out an ambitious agenda that aspires to be universal, integrated, and transformational. The aims of the SDGs therefore reinforce the need for cross-cutting and effective governance. Goal 16, in particular, reflects this consideration by promoting inclusive societies for sustainable development and seeking to build effective, accountable and inclusive institutions at all levels – many of the same goals that open government principles seek to achieve.
Open government policies can support both the substance of SDGs implementation (by directly contributing to the achievement of the goals) as well as to the process by which countries pursue the SDGs (namely, during their design, implementation, monitoring and evaluation).
How countries are already working towards Goal 16: what OECD data tells us
Open government policies and principles are most notably relevant to a number of the substantive targets found in Goal 16, such as those that concern the development of effective, accountable and transparent institutions (16.6), the promotion of responsive, inclusive, participatory decision making (16.7) and the expansion of access to information (16.10). Transparency, inclusion and responsiveness are indeed main characteristics of open government reforms, and OECD research and policy reviews have highlighted their role in promoting good governance.
For example, the OECD Survey on Open Government found that 88% of all survey respondents, including Indonesia, claimed that one of the key objectives they hope to achieve by implementing open government initiatives is to improve the transparency of the public sector, thereby directly supporting Target 16.10. Additionally, 73% of respondents claimed that a key goal of their open government initiatives is to improve the accountability of the public sector, responding directly to the objectives laid out in Target 16.6 (see Figure 1).
Figure 1: Objectives of countries’ open government strategies
Source: OECD (forthcoming), Open Government: The Global Context and the Way Forward, OECD Public Governance Reviews, OECD Publishing, Paris
The survey also shows that many countries are already pursuing activities to increase inclusivity, another key component of Goal 16. For example, 67% of respondents have implemented citizen consultation initiatives, and 71% are involving citizens in policymaking. In addition, 58% of the countries involve citizens in service design, and half provide for citizen participation in service delivery (see Figure 2). Together, these initiatives provide governments with feedback and new ideas and allow stakeholders to offer inputs, thereby enhancing both the quality and capacity of policies to achieve the intended outcome.
Figure 2: Open Government initiatives with a focus on public engagement
Source: OECD (forthcoming), Open Government: The Global Context and the Way Forward, OECD Public Governance Reviews, OECD Publishing, Paris
Examples from Indonesia
For its part, Indonesia has already made important progress in pursuing the kind of initiatives necessary to realise the governance targets laid out in Goal 16 and to support the process for inclusive design, implementation and monitoring of all SDGs. For example, through its creation of a National SDG Secretariat in 2016 and the establishment of the National Open Government Secretariat in 2015 (which built on previous government initiatives to support open government reforms), Indonesia has already put in place important institutional support structures.
The government has supported transparency and participation through legal protections for whistleblowers and the establishment of Pejabat Pengelola Informasi & Dokumentasi (Documentation and Information Management Offices, or PPID), which serve as essential public resources to handle requests for information. Indonesia has already established 694 offices throughout the country, with more on the way. Indonesia has also made rapid advancements in its ability to engage civil society in public affairs via its participatory forums for national and local development planning (Musrenbang) and a national online complaint management tool (LAPOR). As of September 2015, LAPOR had over 300,000 users, receiving 800 reports per day, thereby illustrating the widespread reach and interest in connecting the public and its government to solve practical challenges.
Additionally, the Widodo administration has supported programs that share the spirit and principles of open government that simultaneously help to achieve the SDGs beyond Goal 16. For example, the Pencerah Nusantara and Nusantara Sehat programs – originally established to support the MDGs – seek to improve the quality of life for people living in remote areas with limited access to health facilities. By training community members to provide such services and expanding the pool of healthcare providers, the program contributes to Goal 3, which aims to ensure healthy lives and promote well-being for all. The program has already improved the health of around 133,000 people. In this case, by applying the open government principle of citizen engagement to encourage a broader range of the population, especially young and rural Indonesians, to become involved, Indonesia is creating a more inclusive society.
The way forward
Other countries can learn from Indonesia’s experience, and Indonesia itself can expand upon its successes. As a way forward, countries seeking to support their various multilateral initiatives by linking open government and the SDGs could focus on:
- Continuing to develop the links between open government reforms and the design and implementation of the SDGs. In Indonesia, this could include supporting additional institutional collaboration between the National SDG Secretariat and National Open Government Secretariat. During consultation events for the development of the National Action Plans, furthermore, the sustainable development goals can be explained in the context of open government and each commitment in the National Action Plan can be linked with the relevant SDG goal or target (as Macedonia has done in its Third National Action Plan). This will help ensure coherence between the two initiatives and will facilitate joint monitoring of the progress and results.
- Promoting the use of open data for reporting on SDG achievements (see, for example, Mexico’s open data portal designed to track the SDGs). This would not only support the role of CSOs as watchdogs, but it would foster the reuse of public-sector information in a way that is relevant for the implementation of the SDGs.
- Increasing the involvement of citizens in the policy cycle of the SDGs to ensure that the initiatives are inclusive and that they fully reflect public needs.
The above-mentioned recommendations are included in the OECD Open Government Review of Indonesia, launched by the OECD Secretary-General on October 24, 2016, in Jakarta. The Review highlights the achievements of Indonesia in the field of open government and SDGs, as well as the country’s remaining challenges. Ultimately, by promoting transparency, accountability and participation, the Review has helped to identify how countries can use open government principles to inform their implementation of the SDGs in such a way that meets the broad range of targets.
NAEC and the Sustainable Development Goals: The Way Forward
Mathilde Mesnard, Senior Advisor to the Secretary-General and OECD New Approaches to Economic Challenges (NAEC) Coordinator, and William Hynes, Senior Economist, NAEC Unit. This article is part of the newly-released Insights book “Debate the Issues: New Approaches to Economic Challenges“.
While global integration has been an engine of growth since the emergence of capitalism, the financial and economic crisis highlighted that the current level of interconnectedness between countries and its impact, positive or negative was poorly understood. This increased complexity has exposed the limitations of prevailing analytical tools, policy frameworks, and governance arrangements. It has also underlined the fact that global challenges can only be addressed through collective co-ordination and action.
The 2030 Agenda for Sustainable Development with the Sustainable Development Goals (SDGs) at its core are based on this new understanding. The goals are universal – applicable to all countries with targets adapted to national circumstances and context. The agenda acknowledges that new approaches are needed to tackle an integrated set of challenges. The SDGs are also transformative – they contribute to systemic change and help anticipate future global threats.
The OECD is actively responding to the agenda with better policies for better lives – drawing on the cumulative experience of member and partner countries and capitalising on its value-added. The New Approaches to Economic Challenges (NAEC) Initiative is helping OECD to prepare for the SDGs – through developing integrated analysis and policy advice for tackling an ambitious set of interlinked goals, as well as the forward-looking transformational agenda. As Doug Frantz has argued, the SDGs and NAEC are like Romeo and Juliet – they are meant for each other.
An Integrated Policy Agenda
The Millennium Development Goals focused mainly on social objectives. Less systematic emphasis was placed on economic growth and jobs as well as environmental sustainability and climate change. A key lesson of the MDGs is that sustained change cannot be achieved through one-dimensional or single sector goals. The SDGs with their much broader coverage require multidimensional policy responses which involves identifying trade-offs, complementarities and unintended consequences of policy choices. This is the only way to improve policy advice for dealing in a more realistic and effective manner with global challenges. It privileges collaboration and coherence in addressing interlinked problems by removing the compartmentalised approach that has too often limited the effectiveness of policies. It also requires a more sophisticated policy design in which systemic spill-overs can be beneficial as well as damaging.
Consideration of these trade-offs should at the first instance be undertaken at the national level. This is where policy-makers can optimise among trade-offs between economic, social and environmental goals. Making policy choices on the basis of their inter-relationships requires systemic and long-term thinking, strategic foresight and strategic governance. Realising this vision has proved elusive but gradually the relevant policy signposts have been put in place. Through the NAEC, analytical frameworks have been broadened to assess better the nexus between economic growth and inequality on the one hand (inclusive growth), and between environment and growth on the other (green growth). Less progress has been made on the social-ecology nexus. Further work is needed to better examine the distributional, employment and skills implications of the transition to environmentally sustainable growth. Eloi Laurent has argued at a NAEC seminar that environmental challenges are in fact social problems that arise largely because of income and power inequalities (Laurent, 2016).
With NAEC the OECD is also considering how to cope with the complexity of the world economy replete with numerous interconnections between states, and networks of firms through global and regional value chains. We are increasingly considering the global economy as a complex system. We are measuring the trade and investment linkages between economies – rich and poor – through the Trade in Value Added (TIVA) database. And we are examining how international regulatory co-operation also in tax matters can help ensure a level playing field between jurisdictions.
The policy agenda to meet the SDGs must be transformational to shape a future of intensifying environmental pressures, (e.g. climate change and resource depletion); technological progress and digitalisation as well as rising inequalities.
With NAEC, we are preparing for the future, or possible futures. This requires our Committees and Directorates to keep asking hard questions and challenging assumptions about our understanding of the economy while constantly reviewing our analytical approaches. To ensure that the global goals are reached, we must collectively do the same. We must change our mindsets, approaches and ultimately our economies.
The OECD NAEC Unit is organising a Workshop on Complexity and Policy, 29-30 September, OECD HQ, Paris, along with the European Commission and INET. Watch the webcast: 29/09 morning; 29/09 afternoon; 30/09 morning
Ryan Parmentier, OECD Environment Directorate
Imagine you have an important decision to make. Do you carefully consider the long-term implications of each possible option or do you act impulsively? Would you approach the decision-making process differently if the consequences stretched out to 30 or even 50 years?
Urban, spatial and land use planning professionals repeatedly find themselves in this predicament. There are significant and long-lasting economic as well as environmental impacts of the decisions that are made with respect to transportation, energy, waste, water, buildings and infrastructure. Yet, many land-use interventions do not properly account for environmental consequences. The decisions made regarding where and when roads are built, and the density, type and location of buildings all have long-term impacts on air pollution, greenhouse gas emissions, biodiversity and water use. Even seemingly indirect or unrelated decisions on the taxation of property can have a significant impact on environmental outcomes. As a result, the innumerable decisions related to land use – both big and small – need to be made so that growth is green.
This is an easy thing to say, but an increasingly challenging thing to do in a world that is changing incredibly fast. As a recent article on urban planning in the Economist pointed out, the city of London took 2000 years to grow from 30,000 to almost 10 million people. Cities in China are achieving the same growth rate in just 30 years! The pressures to deliver the services required by an expanding global population are challenging and the long-term environmental consequences are becoming impossible to ignore.
The 2016 OECD Green Growth and Sustainable Development Forum will tackle these very issues under the theme of “Urban green growth, spatial planning and land use”. An engaging agenda is being developed that will explore, through examples, whether existing land-use policies support green growth. The Forum will discuss the challenge of urban sprawl and the associated social and environmental consequences. It will examine the green growth challenges at the city level, giving consideration to innovative approaches and best practices. Issues related to resilient infrastructure, tracking and measuring progress on green growth as well as the role that finance and tax policies can have on land use outcomes will also be discussed. One session will focus on the OECD’s Inclusive Growth in Cities Campaign and discuss how to build cities that are both inclusive and environmentally sustainable.
The Forum will consider green growth at all relevant levels, i.e. from both the national and sub-national perspectives and part of the broader international agenda. The latter includes the Sendai Framework for Disaster Risk Reduction 2015-2030, the United Nations Sustainable Development Goals, the Paris Agreement on climate change, Habitat III (the United Nations Conference on Housing and Sustainable Urban Development – Quito, Ecuador 17-20 October, 2016) and the 2017 Annual Green Growth Knowledge Platform Conference on resilient infrastructure that will be hosted by the World Bank.
The wide-ranging issues related to land use and the broader international agenda clearly demonstrate that to be successful, co-operation is crucial. This includes co-operation across local, regional and national levels to effectively green urban and spatial planning as well as land-use policies and decisions. Enhanced international co-operation is becoming urgent. This is particularly relevant in a world that is facing increasing uncertainty. There will be growing pressure and a natural instinct to continue to make decisions that benefit the short term when the future is uncertain. But now more than ever, we need to work together to make sure that does not happen.
The 2016 OECD Green Growth and Sustainable Development (GGSD) Forum: Urban Green Growth, Spatial Planning and Land Use Paris, 9-10 November
“Cities and Green Growth: A Conceptual Framework”, OECD Regional Development Working Papers 2011/08
Central America has an important opportunity over the next few years to build inclusive and sustainable development through deepening regional economic integration, both to further the development of its internal market at sufficient scale, and to present the region as more attractive for investment. At the Secretariat for Central American Economic Integration (SIECA), we view coordinated regional integration as crucial to the implementation of the 2030 Agenda for Sustainable Development and its Sustainable Development Goals (SDGs). Key priorities are facilitating trade, promoting sustainable, resilient infrastructure and ensuring the integration of small-scale enterprises into value chains and markets (SDG 9), as well as promoting gender equality through women’s economic empowerment (SDG 5).
Regional action to support trade
Central America has made considerable progress in fostering trade openness and economic integration. The majority of trade within the region is now conducted under a free trade regime – tariffs apply to only 1.8 percent of originating products. Because of this progress, intraregional trade went from accounting for 16 percent of total exports in 1960 to 32 percent in 2015.
However, the World Bank estimates that around 12 percent of the value of consumer goods in Central American countries is still associated with the burdensome procedures and out-dated infrastructure in borders. It also takes an average of 13 days to export and 14 days to import products, and freight moves at an average speed of only 17 km per hour. Costs associated with road transportation are particularly high in the region. In advanced economies, freight transport prices are as low as 2-5 US cents per ton-kilometre, but they average 17 US cents per ton-kilometre on main Central American routes; prices stand out even against other developing economies. This is why trade facilitation has become one of the region’s priorities.
In addition to taking part in the implementation of the World Trade Organization (WTO)’s Trade Facilitation Agreement (TFA) – El Salvador, Honduras, Nicaragua and Panama have already notified the WTO of its ratification, and the rest of countries are in the process of doing so –, Central America adopted its Strategy for Trade Facilitation and Competitiveness (STFC) in October 2015. The Strategy will involve the implementation of five short-term measures to streamline border management procedures, and a medium and long term plan to consolidate a Coordinated Border Management (CBM) system in Central America, following the guidelines and best practices from the World Customs Organization (WCO). Successful implementation of the Strategy could enable an increase of between 1.4 and 3 percent in the region’s GNP and a surge in exports between 4.2 and 11.9 percent, according to the UN Economic Commission for Latin America and the Caribbean (ECLAC). The STFC, moreover, is conceived only as a step towards deeper economic integration. A roadmap to be implemented from now to 2024 has also been approved with the aim of establishing a Central American Customs Union (CACU).
Besides trade and integration, Central America is seeking to improve its infrastructure. Panama is the most ambitious; having recently invested US$5.58 billion in the expansion of the Panama Canal; they’re also creating a second metro line, and have already announced a third one valued in US$2300 million. Meanwhile, Honduras has focused in infrastructure supportive of trade facilitation, and Guatemala and El Salvador have devoted resources to energy-related projects.
Despite this the region still faces a sizeable investment gap. According to ECLAC estimates, Latin America needs to spend some 6.2 percent of GDP per year on average to fund infrastructure investment needs in transport, energy, telecommunications, and drinking water and sanitation, but spending is currently below 3 percent of GDP in Central America. The region also needs to revamp its existing infrastructure, building resilience to the effects of climate change, and improving adaptive capacity to face climate-related hazards and natural disasters, reflecting the targets under SDG 13 on climate change.
Just as crucial is investment in boosting micro, small and medium enterprises (MSMEs). Around 96 percent of Central America’s companies are MSMEs, which support 54 percent of employment and contribute to 34 percent of the region’s GDP. It is thus crucial to harness the potential of the regional market – which is large, with similar cultural background and a shared language – to offer small firms the opportunity to engage in international trade. SIECA has intervened to bolster MSME participation in value chains for key export products, including bovine meat, natural honey, foliage, cardamom, tilapia and shrimp, through the Regional Programme for Quality Support of Sanitary and Phytosanitary Measures in Central America (PRACAMS), which operates with funds from the European Union.
Moving forward, the region is looking to support MSMEs in other sectors of industry, creating a path for entrepreneurs to join the formal economy, create better jobs, and – because 46 percent of micro enterprises are owned by women – boost women’s participation in regional and global value chains and their economic empowerment. A recent SIECA study shows that the sectors with the most potential for participation in value chains include food preparations, vegetables, cardamom, coffee, and cattle.
Addressing financing gaps
All these efforts require a substantial amount of support. Overall, SIECA managed US$9.3 million in cooperation funds in 2014 and US$11.7 million in 2015, including for the work on MSMEs and GVCs above. As the sustainable development agenda moves forward, however, regional efforts will also require improved monitoring and evaluation mechanisms to ensure effective allocation of funds and an overarching strategy that ensures resources are aligned with the region’s own development goals.
Preventing overlaps or contradictions between each countries’ fund allocation will be crucial. To achieve this, the Council of Ministers of Economic Integration is expected to soon approve the Central American Aid for Trade Programme (AfTP), and later submit it to the Summit of Presidents for its adoption, a systematic investment plan to address regional trade-related investment needs in a coordinated way.
In SIECA’s experience, aid is more effective when there is a close collaboration between countries and donors. Clear communication and feedback mechanisms have helped us enhance the effectiveness of our collective actions. We’ve also learned the importance of coordinating the execution of projects at the regional level, to avoid redundancies and ensure regional efforts are coherent. Instruments to assist leaders in identifying financing gaps and seek investment and funds to cover them are also crucial. Applying these lessons will be crucial for success as Central America moves ahead with the implementation of the 2030 Agenda.
Erik Solheim, Former Chair of the OECD Development Assistance Committee (DAC), based on the editorial of the 2016 OECD Development Co-operation Report: The Sustainable Development Goals as Business Opportunities.
In 2015, when world leaders adopted the Sustainable Development Goals, we committed to the most inclusive, diverse and comprehensive and ambitious development agenda ever. By doing so, we acknowledged that development challenges are global challenges. The new global goals represent a universal agenda, applying equally to all countries in the world.
The year 2015 was the best in history for many people. We are taller, and better nourished and educated than ever. We live longer. There is less violence than at any other point in history. Over the past decades many countries, spearheaded by the Asian “miracles” – such as in Korea, the People’s Republic of China and Singapore – have had enormous development success. By believing in the market and the private sector, these nations have experienced strong economic growth and several hundred million people have been brought out of poverty. The debate within the development community on the importance of markets and the private sector is a thing of the past. The debate is won.
But based on astonishing success, we need to bring everyone on board. The 2030 aim is to eradicate extreme poverty, but to do it in an environmentally sustainable way. Luckily – for the first time in history – humanity has the capacity, knowledge and resources needed to achieve this. Never before was this the case. The leaders of the past have never set such goals, nor did they have at their disposal the policies and the resources to reach them. The Sustainable Development Goals cover the economic, social and environmental dimensions of life. And they emphasise that increased co-operation between the public and the private sector is vital to reach them.
Implementing the new Sustainable Development Goals will require all hands on deck, working in concert to build on each other’s strengths. In this report we look at the opportunities for businesses both to make money and do good for people and the environment. We must go beyond traditional thinking that business revenues depend on destroying the environment. Smart investment in sustainable development is not charity – it is good business and it opens up opportunities.
In developing countries, small and medium enterprises are considered the engine of growth. In Asia, they make up to 98% of all enterprises and employ 66% of the workforce. Especially for green growth, small and medium businesses can play an important role by acting as suppliers of and investors in affordable and local green technologies. For instance, in Africa several businesses offer “pay-as-you-go” solar energy to low-income households that do not have access to central resources.
Over the next 15 years, billions will be invested annually by the public and private sectors. We need to make sure that this money creates jobs, boosts productive capacity and enables local firms to access new international markets in a sustainable way. What’s more, these flows are often coupled with transfer of technology that has positive and long-term effects.
This report cites the results of interviews with executives from 40 companies that had performed above the industry average in terms of both financial and sustainability-performance metrics in various sectors – including oil and mining, gym shoes, soup, cosmetics and telecommunications. The research demonstrates that sustainable action can contribute to increased efficiency and profits, gains above and beyond their social and environmental benefits. The returns on capital include reduced risk, market and portfolio diversification, increased revenue, reduced costs, and improved products.
We need to take these experiences further. The 17 Sustainable Development Goals represent a pipeline of sustainable investment opportunities for responsible business. But fulfilling that potential will mean ensuring that business does good – for people and the planet – while doing well economically.
Although some countries are making progress, no country has achieved environmental sustainability. The worse things get, the more difficult it will be to find solutions. We need to take action now. There is more bang for every buck when profits are combined with bringing people out of poverty, improving environmental sustainability and ensuring gender equality. For example:
- Ethiopia’s growth has benefited the poor and the country aims to become a middle-income country without increasing its carbon emissions.
- Brazil has reduced poverty and equality while cutting deforestation by 80%.
- Costa Rica has revolutionised conservation by providing cash payments for people who maintain natural resources. Forests now cover more than 50% of the country’s land, compared to 21% in the 1980s.
- The Indonesian rainforests, the largest in Asia, are doing much better than recently. Deforestation decreased for the first time in 2013 and the positive trend is continuing. The main palm oil companies have made a no new deforestation pledge.
Poverty reduction can be green and fair. But we need to remember that neither developing nor developed countries will sacrifice development for the environment. But development comes to a stop if natural resources are exhausted, water continues to be polluted and soils are degraded beyond manageable levels.
For those who do not benefit from all the success stories, it is necessary to identify and replicate good policies that actually improve lives. Official development assistance is important for the least developed nations and countries in conflict. Aid remains at a record high at USD 132 billion in 2015, but private investments are more than 100 times greater than aid and more important for poverty reduction and economic growth.
In order to make the most of private investments for sustainable development, it is fundamental to know more about how much is being mobilised from the private sector as a result of public sector interventions. In this report the OECD describes how it monitors and measures the amounts being invested. The European Union found in 2014 that by blending public and private investments, EU countries used EUR 2 billion in public finance grants to mobilise around EUR 40 billion for things like constructing electricity networks, financing major road projects, and building water and sanitation infrastructure in recipient countries. We should be inspired by this example to do more. Business prospers when society prospers.
Each and every decision we take today related to private investment will have historic implications. We must learn that more and better investment is possible. Balancing economic growth with environmental sustainability is not only feasible – it is fundamental.
In this report we look at the opportunities the new Sustainable Development Goals offer for doing good business, for profits, people and the planet. It offers guidelines and practical examples of how all sectors of society can work together to deliver the 2030 Agenda. Investing in sustainable development is not charity, it is smart. We just need to go ahead and do it.
The ratification of the Sustainable Development Goals (SDGs) at the UN General Assembly in September 2015, composed of 17 goals and 169 targets, set a global agenda for achieving environmental sustainability, social inclusion and economic development by 2030. They provide a set of ambitions to whose realization all countries must contribute. One of the challenges is adjusting our focus, looking beyond national approaches to the powerful role that regions and cities play. The global agenda will require local data, the engagement of many stakeholders and all levels of government, and improved government capacity to steer and manage the delivery of public policies for inclusive growth.
Regions at a Glance 2016 makes a critical contribution to advancing this global agenda, providing disaggregated data and unveiling the differences within countries that otherwise remain hidden behind national averages.
For the first time, the assessment of well-being outcomes across OECD regions includes a range of dimensions, from income and jobs to health, the environment or civic engagement. It can help countries pursue policy goals that take into account the specific conditions of regions and incorporate local solutions.
These new data are revealing. For example, average life expectancy at birth in Mississippi, USA, is 75 years, 6 years less than in Hawaii. Differences within some cities are even more staggering: for example, there is a 20-year gap in life expectancy between neighbourhoods in London; this is more than twice the 8-year gap among OECD countries. Similarly, while gaps across OECD regions have narrowed over the last decade in well-being dimensions such as education and access to services, gaps have increased in income, air pollution and safety. In 2014, the difference in unemployment rates among all OECD regions was above 30 percentage points – almost 10 percentage points higher than the difference in unemployment among OECD countries.
The SDGs will not be achieved without the full engagement of a broad spectrum of stakeholders, including the people living in the world’s cities. Metropolitan areas, home to about half of the population of the OECD, are critical to the economic prosperity of countries, contributing to 62% of GDP growth of the OECD area in the period 2000-13. Household incomes were 17% higher in metropolitan areas than elsewhere in 2013. However, metropolitan areas are also host to greater inequality than their respective countries, and these inequalities grow as cities become more populated.
This is not just about income: inequality encompasses many dimensions of life. In 2014, 53% of the OECD urban population was exposed to levels of air pollution higher than those recommended by the World Health Organisation. If unchecked, these disparities will grow as urbanisation continues in OECD countries. A holistic approach is required to ensure that cities are inclusive, sustainable and safe.
The challenge is to ensure that all levels of government are implicated in the implementation of the SDGs. OECD data show that regional and local governments play crucial roles in the well-being of today’s and future generations. For example, 70% of subnational government (SNG) spending goes to education, health, economic affairs and social expenditures. At the same time, Regions at a Glance documents how spending responsibilities are shared across central and subnational governments. But aligning priorities between national and subnational governments and ensuring the capacities and resources needed for implementation remain critical challenges.
New data from an OECD-EU Committee of Regions survey of European regional and local authorities show that the lack of co-ordination across sectors and levels of government, red tape, and excessive administrative procedures are the top challenges for infrastructure investment at the subnational level.
The SDGs, UN Conferences on Climate Change, and the New Urban Agenda of Habitat III offer opportunities to refocus our attention on multi-level policy actions and on local data. Within this context, Regions at a Glance 2016 is an important contribution to creating pathways from the local level to meeting global goals.
OECD Forum 2016 – Inclusive Cities