Changes to the international financial system, as much as new sources of development assistance, will be essential if the world is to meet any new post-2015 development agenda.

That was among the themes that emerged at an informal discussion yesterday among diplomats, UN staff, and representatives of civil society at the offices of the Baha’i International Community.

The monthly breakfast meeting featured opening remarks by Eduardo Gálvez, Deputy Permanent Representative of Chile to the UN, and Shari Spiegel, Chief, Policy Analysis and Development Branch, Financing for Development Office, UN Department of Economic and Social Affairs.

Ambassador Gálvez and Ms. Spiegel issued a broad plea for recognizing that any new UN development goals will require new mechanisms for financing them – and that such mechanisms should ultimately focus on creating enabling environments at the domestic and international levels that will facilitate long term sustainable economic growth.

“We live in a globalized world and you need an international enabling environment,” said Amb. Gálvez. “And that means some changes with regard to trade and investment.”

Both speakers also emphasized the importance of creating incentives to help shift investors from short-term to long-term thinking.

To accomplish such a shift to the long term, said Ms. Spiegel, “we need good governance, we need good institutions, we need the rule of law, and we need a strong policy framework,” explaining that institutional investors, who have upwards of $85 trillion in assets at their disposal, won’t invest in sustainable development unless there is a solid framework domestically and internationally to mitigate risk.

Their remarks – and the discussion that followed –ranged over a series of related topics, which included:

• The need to change fundamentally patterns of consumption and production. The world is now understood as finite in its resources, and it is clear humanity is “over-consuming.”
   
• That ODA (overseas development assistance) cannot possibly generate enough funding to meet new development goals. Those goals can only be met in the long term by new incentives that help spur sustainable economic growth that includes everyone, especially those on the margins.
   
• To accomplish such growth, an enabling domestic and international environment must be created that encourages long term investment over short term thinking. Such a framework must include lower barriers to trade, enhanced peace and security, and a greater emphasis on the rule of law. One expert in finance noted that private investors can precipitate a crisis when they pull funds out of a country in anticipation of the very crisis they fear. Good governance can help address that, as can efforts to promote ethical investing.
   
• By one estimate, achieving sustainable development will require a trillion dollars a year. While that is daunting, people around the world put aside some $18 trillion a year in savings. One challenge, then, is to create a financial system that incentivizes the reallocation of existing savings to social goals.
   
• While the private sector has a key role to play in supporting new efforts at sustainable development, it cannot be a substitute for public financing and institutions that will be needed to address critical “gaps” in social welfare, inequalities of wealth, environmental degradation, etc.
   

The meeting was co-sponsored by International Movement ATD Fourth World. It was held 22 October 2013. For the notes of the meeting and its program, click here.

To view Ms. Spiegel’s presentation, click here.