5 November, 2015 - Zoom to Bahrain, 2015: Urbane, cosmopolitan, and host to this year's High Level Arab Forum for Sustainable Development, one of the regional pre-cursors to the upcoming global conference on financing for sustainable development later this year in Addis Ababa.
Bahrain, as I found out, has an intriguing history. Once a center of pearl trading several millennia back, it was later home to a movement worshipping a shark deity (known as Awal). Later, in the 9th Century AD, a group of idealists called Qarmatians attempted to found a society based on egalitarianism and reason - not a bad pedigree for country hosting a regional dialogue on financing for sustainable development.
Although the conference touched on a range of issues - from the Arab position on climate negotiations, to the relevance and opportunities embedded in the Sustainable Development Goals- the issue that resonated most loudly with me were the discussions on financing, and how the reflections from Bahrain could feed into and strengthen a strong outcome at the Addis conference.
Taking a spin through the zero draft of the outcome document - which has now been updated and is a living, breathing document - one can discern three currents of change that run through and carry the potential for a significant shift in how countries frame and harness the power of financial markets for driving sustainability forward.
First, the policy innovations. High on the agenda are reforms to the way financial resources are mobilized and allocated, particularly through fiscal and regulatory policies at the national level. How do markets and nations begin to factor in and deal with environment risks and liabilities, that threaten to undermine growth and gains in human well-being? What are some of the policy drivers, such as fiscal and to a lesser extent, monetary and non-conventional easing policies, capable of shifting financial flows away from hot capital and speculation and into job-creating, clean investments in the real economy?
Second, the institutional innovations. Some of the very interesting research and findings coming out of the Inquiry into the Design of Sustainable Financial Systems, has made its way into the outcome document, such as the need for pressing and systemic regulatory reform of financial markets. Green banking, and in particular green bonds and more regionally honed innovations like green "Sukuk", a form of equity instrument, were also on display and speak to the possible learning and upscaling of local financial instruments.
And finally, the measurement frame - how we define and measure success. While not a new conversation, the fact that language on moving beyond traditional measurements such as GDP growth, to be complemented with indicators such as inclusive or comprehensive wealth, are a welcome addition; as is the recognition that reframing national economic planning and development policy around these new indicators may produce a better compass for navigating the employment, health and sustainability challenges of the 21st century. And extending this frame to clear and simple indicators of long term performance at the enterprise level shows that policy makers and business leaders can align for impact and coherence.
There was an interesting twist in this story of taking institutional and policy innovation in the financing realm from Bahrain to Addis, and the symbolism is meaningful. For Addis Ababa is best known as the cradle of humanity, the home of Australopithecine Lucy, and the epicenter of our genetic ancestry. But beyond that, Ethiopia is also a harbinger of the new global south, the first country in Africa to join the League of Nations and then the UN. Addis symbolizes our origins, and in a modern day sense, our ability to join together at critical moments to solve complex problems that defy a one-dimensional solution.
Like financing for sustainable development. If we want our economies to be truly green and inclusive, then there is no room for complacency. There is no room for looking at the incremental needs, the USD 100 billion targets or even the USD 1 trillion targets, noble as they are, because they simply will not do the trick.
If we are not capable of looking at the totality of our financial wealth - the estimated USD 300 trillion in assets - and how our savings are invested - an estimated 15-20% of total global GDP each year, or a staggering USD 10-15 trillion invested annually in total capital formation - then we are missing the big picture. The question is not how much resources are needed to incrementally reach a 2 degree target, but rather, how much of total current financing and assets can we afford to not be underwriting the future sustainability of our people and planet?
A simple question, but a daunting one. Are we heading towards a society of shark worship, of social Darwinism, of constant movement and consumerism at the high end of the food chain; or engaged in an effort to bring reason and science to bear on forming a more equitable and just society, starting with a green and inclusive economy?
