By Silyvia Alusa

Amidst the global push to attain Sustainable Development Goals (SDGs) by 2030, the World Investment Report 2024 has revealed a troubling 10 percent reduction in new funding for SDG sectors, with agrifood systems, water and sanitation attracting fewer finance projects in 2023.

As demonstrated in the report, the decline in financial support poses significant challenges to the attainment of SDGs, underscoring the urgent need for policy actions to reinvigorate sustainable finance to narrow gaps for global goals.

UN Secretary-General, António Guterres underscored that insufficient SDG funding is hindering the implementation of the 2030 Agenda for Sustainable Development, particularly in developing countries, adding that, “we need urgent action to remove obstacles and provide a transparent, streamlined investment climate for sustainable development.”

The report sheds light on the tight financing conditions that prevailed in 2023, resulting in a staggering 26 percent downturn in international project finance, a critical source of funding for infrastructure investments. Accordingly, investment in sectors linked to the SDGs experienced a decline, raising concerns about the attainment of the global goals.

The report highlights that agrifood systems and water and sanitation projects recorded fewer internationally financed initiatives in 2023 compared to 2015 when the SDGs were adopted.

Further exacerbating the financial challenges, the report highlights a significant slowdown in sustainable investment funds, with inflows dropping by a staggering 60%. This decline raises concerns about the integrity of sustainable investment practices and the potential for greenwashing, where misleading sustainability claims may distort investment decisions and erode trust in sustainable finance mechanisms.

The report reads that the average net exposure of green funds to climate-positive assets (low-carbon assets minus fossil fuels) is only about 20 per cent, and fewer than 5 percent of these funds are free from oil and gas assets.

With the escalating concerns over greenwashing and the dwindling support for sustainable investments, the report calls for immediate policy interventions to mitigate risks and restore confidence in sustainable investment strategies. Urgent actions are needed to address the financial constraints hampering progress towards the SDGs and prevent a widening backlash against sustainable development initiatives.

The global stakeholders are urged to prioritize sustainable finance, enhance transparency in investment practices, and bolster accountability to safeguard the integrity of sustainable investment strategies.

Governments are encouraged to promote investment in sustainable development projects, including through outward investment promotion measures and provisions in international agreements.

The report strongly recommends systematic efforts to address greenwashing, including well-defined product standards, robust sustainability disclosures, external auditing and third-party ratings.

Policymakers should also consider the negative spillover effects of sustainability reporting standards on firms outside the main markets. In particular, small and medium-sized enterprises in developing countries may struggle to meet increasing disclosure requirements, which could affect their market access and participation in global supply chains, the report reads.