This blog was originally published on Illuminem, and has been co-authored with Rhian-Mari Thomas. She is the CEO...
Financing Climate & Sustainable Development / Report
Diagnosing how the sovereign ceiling functions as a simplifying shortcut that can obscure meaningful differences across borrowers, and proposing an alternative credit rating approach based on disaggregating sovereign risk into specific transmission channels.
The message is by now clear: our global economy must be fundamentally reoriented and redeployed in order to achieve the SDGs and the commitments of the Paris Climate Agreement. This requires action by all stakeholders, including non-financial and financial firms, debt and equity investors, government policymakers, and consumers. In terms of the amount of money required, it has been estimated that meeting the SDGs will require $5 to $7 trillion annually, with investment needs for developing countries amounting to roughly $3.3 to $4.5 trillion per year. While a big picture view of and strategic thinking regarding the entire economic ecosystem is necessary to generate such investments, this paper, produced in conjunction with the UN Inquiry into the Design of a Sustainable Financial System, focuses on the actual and potential role of one type of financial flow—FDI—in achieving the transition to a low-carbon, just, and sustainable world and, more specifically, FDI flows into developing countries.
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