This input paper, a collective effort led by GSG Impact and supported by 50 organisations across 45 countries, presents a framework for addressing the critical funding gaps for the Sustainable Development Goals (SDGs) and climate targets in emerging and developing economies (EMDEs). Highlighting systemic financial reforms, blended finance innovations, and the pivotal role of local actors, this paper offers actionable recommendations to ensure a just and sustainable global economic transition.
Recommendations and call to action for governments and FFD4 stakeholders:
Support and invest in domestic initiatives
Provide grants to fund market development, including for capacity building and technical assistance for local business development to increase the pipeline of impactful, investable projects. Provide concessional funds to invest in early-stage businesses and domestic impact funds. Support the design and structure of new financial products for high-need geographies, with measurable impact targets. Reduce regulatory barriers for investments in low- and middle-income countries.
Expand De-Risking Tools
Establish flexible catalytic capital facilities able to operate with scale and in diverse geographies (for instance by repurposing small percentages of ODA). Boost the availability of partial guarantees, first-loss capital, and subsidised financing with ambitious targets for mobilising private capital (targeting capital mobilisation ratios that will fill the SDG & climate finance gaps). Prioritise local currency solutions. Track and report the effectiveness of de-risking tools through clear financial and impact metrics. Cooperate with credit rating agencies on their ability to rate structured financial vehicles to clarify risk, leading to a more efficient allocation of capital.
Foster greater impact transparency
- Issue regulation to mandate sustainability disclosures by both public and private entities, ensuring that all stakeholders are accountable for their impacts on people and the planet, while contributing to build capacity in those markets actors that are less prepared to respond to such requirements (i.e., MSMEs)
- Replace GDP as a sole measure of performance by incorporating and prioritising notions of wellbeing and impact goals such as the SDGs in public sector accounting and reporting