Workshop on Greening Industrial and Financial Policy for Economic Transformation
15 mai 2024
Ladies and gentlemen,
A warm welcome to this seminar which focuses on issues at the core of economic policy.
Today’s economic policy needs to find a balance between safeguarding the land, oceans, and air on which all life depends, and using these resources in a sustainable way to promote economic development, inclusive growth, and vitality. Achieving this balance is the great challenge of our times - in all countries around the world. And the clock is ticking.
But the challenge can also be an opportunity. An opportunity to transform our economies and move forward in a way that does not reproduce the mistakes of the past. And an opportunity to learn and lay a better foundation for the future.
While these issues are important for all countries, they are especially for Asia and the Pacific.
This is the region where efforts to achieve global climate goals - and the Sustainable Development Goals more broadly - could be most impactful.
It is also a region where many countries, including the four represented here today, already have ambitious national goals for decarbonisation. Some are leading negotiations on climate change and development at the global level, with an impact beyond their economic weight.
Moreover, this region hosts a history of successful transformation on an extraordinary scale: From subsistence agriculture to industrialisation within a staggeringly short time and within current memory. The transformations were led by developmental States, offering us important lessons for how governments can carry out transformative economic policies.
Asia and the Pacific also has significant financial institutions and instruments, including regional and national public banks, Sovereign Wealth Funds, and other sources of public and private finance that can be harnessed to the task. There is a wealth of experience to call on. Hence, it is an important opportunity to share our respective knowledge and learnings.
How to align climate and development goals has become the topic at all policy levels - national, regional and multilateral. And also for UNCTAD, or UN Trade and Development as just rebranded.
Through our research and analysis, we want to help countries better align climate finance with development finance and ensure a coherent approach to the linkages between trade, investment, finance, industry and development.
Our research has highlighted ways in which to scale up finance for the massive heavy lifting that the climate and development agenda requires. An estimated 4 trillion US dollars needs to be mobilized each year to fight climate change and achieve the Sustainable Development Goals. While the requirements are substantial, it is also valuable to put them into perspective. The 4 trillion US dollars represent not even 1% of total global financial assets, currently valued at more than 470 trillion US dollars.
But after more than a decade of climate pledges and green-financing initiatives, it has proved very difficult to access that 1%. That is why UNCTAD argues that a different approach is needed.
We argue that the international financial architecture needs significant reform; both to scale up new additional funds and to remove financing flows that are perverse for the climate goals and SDGs. This includes cutting back the 1 trillion US dollars of new lending in the fossil fuel sector last year.
Or the 60 billion plus dollars of subsidies paid to producers of fossil fuels. These finances could be better directed to more renewable, sustainable uses.
Similarly, public development banks need much stronger support. They remain severely under-capitalised for the heavy lifting required of them. National public banks are often quite constrained in what their government owners will allow them to do. We thus recommend government shareholders to capitalise them adequately, and to give them the mandate and policy space for the kinds of climate-friendly and developmental lending that private lenders are unable or unwilling to shoulder.
While individual countries can do a lot, there is a limit to what can be done alone. Regional collaboration is a powerful first step. For example through regional energy and industrial policies, or through regional banks and funds.
But global collaboration is essential. For this reason, it is significant that we meet here in Bandung. Here in 1955, the Asia-African Conference brought together leaders and delegates from 29 countries. They represented the newly independent nations of the Global South and the demand for the voice of developing countries to be heard in global governance.
As I said yesterday in the event on UNCTAD 60, it is that same spirit that led to the first United Nations Conference on Trade and Development in 1964. The conference then became the embodiment of an emerging global South that asserted its right to be part of the global economy and its quest for prosperity for all. Throughout the last 60 years, UNCTAD has been a voice of the aspirations and concerns of the Global South for a more inclusive global economy. And we remain deeply committed to this cause.
It is with this commitment and the high stakes we are collectively facing today, that I am pleased to open the discussions in this workshop.
And before closing, I want to cordially thank the Government of Indonesia for its support in hosting the workshop.
Thank you.
