The Sustainable Development Goals (SDGs) are a universal call to action to achieve a comprehensive agenda for the future, including ending poverty, protecting the planet and ensuring that all people enjoy peace and prosperity. The high ambition set by the SDGs requires a strong implementation framework through financing, data, new technology and partnerships. While financing is needed for large and path-changing investments in sustainable development projects at the country level, smaller and catalytic initiatives that can create critical windows of opportunity for the achievement of the SDGs are also important. Such initiatives help with early investment in larger projects, help exchange knowledge across countries and organisations, nurture innovation and provide access to new data or new analysis. Often, such targeted and strategic initiatives are not always eligible other forms of traditional development finance.

In early April, the Dag Hammarskjöld Foundation brought together financing experts and leadership from five UN Country Teams (UNCTs) to brainstorm some of the best practices and innovations emerging from all UN Country Teams. The question raised was how these best practices might drive further innovation towards financing the United Nations’ 2030 Sustainable Development Goals (SDGs). In a broader context, the Dag Hammarskjöld Foundation has a committed programme focused on UN renewal; the idea that since the world at large has experienced significant change, the UN development system must embrace more dynamic approaches.

The Secretary-General’s June 2017 report about repositioning the UN development system (UNDS) to deliver on the 2030 Agenda calls for a comprehensive overhaul of the UNDS approach to financing. This includes making the United Nations Country Teams (UNCTs) better equipped to support governments and national partners unlock broader, non-traditional financing for development.

For decades, the challenge of bringing private investment to bear in fragile and low-income states has been a focus in development discourse. Despite a need for the jobs, services and revenues that the private sector can provide, the risks of investment have been prohibitive. New World Bank Group financing instruments offer the promise to mitigate risks and, alongside reforms, can help realise the potential of private investment in risky places.

Three years after the adoption of the Addis Ababa Action Agenda and the 2030 Agenda, there is a growing focus on how to ensure that development cooperation – especially Official Development Assistance (ODA) – accelerates economic growth and helps mobilise additional resources for sustainable development. New approaches are changing the development finance landscape and creating opportunities to scale up the contributions of all sources of financing towards the Sustainable Development Goals (SDGs), both public and private, domestic and international as called for in the Addis Agenda. As this happens, it is important that providers more fully engage with, tailor operations to, and harmonise their interventions in countries and sectors typically excluded from financing innovations.

The digitalisation of finance will transform the global financial system and its interface with the real economy. There is both opportunity and need to harness this disruptive dynamic in financing the 2030 Agenda and meeting the Paris agreement commitments on climate.

When talking about how to implement the Agenda 2030 for Sustainable Development and the Sustainable Development Goals (SDGs), a strong emphasis is often placed on private flows and partnerships – and rightly so. Not only are the financing needs massive, the Agenda is also about a transformation towards sustainable development that needs to take place worldwide, domestically and at the international level, in the public and in the private sphere. However, development cooperation - offical development assistance (ODA) and South-South cooperation (SSC) - has a crucial role to play.

For decades the United Nations Development System (UNDS) has existed and even thrived by mobilising and spending grant resources through projects. This is the traditional ‘funding’ approach and it has served the UNDS well; however, there are two significant shifts that suggest the UNDS needs to go beyond this funding model to a financing approach.

The former Secretary-General of the United Nations, Ban Ki-Moon, referred to the World Health Organization’s (WHO) financing reform as a model for other agencies1 . What are the key features of this model compared to other United Nations (UN) agencies that makes it a good example to follow? What have been the key achievements? What are its limitations or challenges, and what can we learn from it? While the reform process initiated in 2011, following the financial crisis, continues to be implemented some of these questions can be addressed and help promote a culture of learning and ensure lasting change for the organisation.

Over the past year we have witnessed multilateralism lose ground in the Western political landscape, particularly in the United States. US President Donald J. Trump’s nationalistic rhetoric indicates a narrow understanding of US priorities at the expense of an international agenda. The announced budget cuts to US foreign policy more broadly, and intended drastic reductions to contributions to the United Nations (UN) more specifically1 , sent a clear message: the US intends to turn priorities away from the UN; managing global governance is no longer a political priority. On top of this, the UK’s decision to leave the European Union might soon limit Britain’s ability to pay.

A paradigm shift for development finance has been achieved with the recent 18th replenishment of the World Bank Group’s (WBG) International Development Association (IDA): the largest source of un-earmarked concessional finance for the world’s poorest countries. The IDA18 negotiations concluded in December 2016 with a historic outcome of US$ 75 billion for the poorest and neediest countries. IDA18, which will start implementation on 1 July 2017, for a three-year period, marks a 50% increase from the US$ 52 billion committed under IDA17. IDA18 is a milestone for the World Bank Group, both in terms of policy and financial innovations.

‘Follow the money’, goes the advice, for understanding any organisation. In the UN development system (UNDS), the bulk of member states’ contributions take a fairly ballistic course: launched with political fanfare, the money is aimed at the narrow landing place of a concrete project or purpose. 77% of development and humanitarian resources were earmarked in this way in 2015, ‘bilateralizing’ and bypassing the UNDS’ multilateral- and value-adding mechanisms. The three largest donors, accounting for 47%, also rely heavily on ear-marking, and have thus practically cancelled the contract according to which the UNDS, like any other organisation, is (core-) funded to implement joint global agendas. Emerging donors are adapting the same transactional funding pattern for their South-South Cooperation.

These are troubling financial times for the United Nations (UN). Recent estimates suggest the UN is US$ 22.8 billion short for meeting the humanitarian needs of 98.2 million people affected by crisis in 36 countries. Meanwhile, the single largest donor to the UN, the United States, is threatening to cut assessed and voluntary funding by as much as 50%. The ambitious global mission of the United Nations is, sadly, not matched by its balance sheet.

Until recently, the notion of financiers and investors in regular attendance at serious United Nations (UN) deliberations would have seemed outlandish – or at the very least, inappropriate. Indeed, it wasn’t until the end of the 1990s, with the adoption of the Agenda for Development, that the UN even began exploring the theme of financing for development – convening conferences and forming the ‘Ad-Hoc Open Ended Working Group of the General Assembly on Financing for Development’. Multilateral banks as well as business and non-governmental organisation (NGO) representatives were brought on to help shape what would later become the international conferences on Financing for Development (FfD). While paying some lip service to the role of private finance, the focus of the FfD agenda was largely on public funding and official development assistance (ODA).

What does leveraging finance for sustainable development mean? In the simplest terms, it is when private capital is being raised against public capital to implement sustainable projects and attain specific development goals. Today, there is a growing palette of means by which this is achieved, from special one-on-one partnerships, to the use of match-making platforms, the development of blended finance and the recourse to green or social bonds. Another form of leverage is also at work, namely at UN Environment, through its Finance Initiative (UNEP FI).

In an increasingly interconnected, complex and turbulent world, business is navigating uncharted waters. Amidst this uncertainty, the global community came together in a global call to action to guide all stakeholders– including business– in building a more sustainable, equitable and inclusive society. While the Sustainable Development Goals (SDGs) were designed for and approved by governments, they also constitute a global framework for measuring business contributions to society – how companies can ‘win with purpose’. According to a recent survey, more than two thirds of participating companies said they were already planning to engage with the SDGs, but less than half plan to embed them into their business strategy in the next five years.1 As the United Nations Global Compact 2016 CEO Survey notes, only 59% of companies report that their company is able to accurately quantify the business value of their sustainability initiatives.² Therefore, the central question is: Should the SDGs really matter to business?

The rough contours of financing for the Sustainable Development Goals (SDGs) are now well known. Low-income and lower middle-income countries alone will need incremental resources of US$ 1.4 trillion per year over the next 15 years.¹ The challenge is how to mobilise and orient enough capital for investments that contribute to achieving the SDG targets. In this note, I argue that ‘blended finance’, a much used and much abused term that broadly refers to the mixing of funds from public and private sources, offers the greatest promise, but is still in its infancy as an instrument for sustainable development. The Organisation for Economic Co-operation and Development (OECD) estimates that only US$ 27 billion of private money was mobilised by official development finance interventions in 2015 in blended finance operations.² This should increase to several hundred million dollars per year within five years.

Financing the 2030 Agenda for Sustainable Development is a substantial undertaking − the annual funding gap for developing countries is currently estimated at trillions. Blended finance (using development cooperation to de-risk, crowd-in or ‘leverage’ private investments in these countries) is attracting attention for its potential to help fill this funding gap, including within the Addis Ababa Action Agenda.¹ With financing especially challenging in situations of conflict, fragility and crisis (‘fragile contexts’ for the purpose of this paper)², the role that blended finance can play in such contexts is a particular focus of emerging international discussions. This paper explores the role of blended finance in fragile contexts and identifies considerations and recommendations for the United Nations and wider development actors. We recognise that fragile contexts are diverse (from prevention and risk, to post-conflict and transition, and active crises) and that considering different types of evidence will be critical.

Moving from traditional resource transfer models to innovative financing solutions that shift the dynamics of where finance flows within a country is important for meeting the Sustainable Development Goals (SDGs). There is untapped potential for blended finance models to use international public finance, notably Official Development Assistance (ODA), to unlock additional resources and channel them to the families, local governments and Small- and Medium-sized Enterprises (SMEs) that are underserved and where resources are most scarce. This can be achieved by deploying ODA in the form of technical assistance as well as capital grants, concessional loans and guarantees in ways that de-risk and catalyse public and private, domestic and international, investments to support economic transformation at the local level and tackle entrenched inequities and exclusions.

Achieving sustainable development results at the level of scale and ambition inherent in Agenda 2030 will require extensive mobilisation, joined-up systems and approaches, strong leadership and organisation. This is where UN multi-partner pooled funds offer a distinct advantage relative to project-based instruments and where the UN development system (UNDS) experience with such funds is key. The experience and performance of UN inter-agency and multi-partner pooled funds at the global, thematic and country levels have been widely documented and recognised. Since 2004, pooled financing instruments have been extensively applied and tested in advancing progress toward humanitarian, peace, development and climate goals in the UN, international financial institutions (IFIs), bilateral actors, private sector and beyond.

There can be no sustainable development without peace and no peace without sustainable development. So confirms the preamble to the Sustainable Development Goals – our collective mantra and roadmap for the years leading up to 2030.

There is much that collectively we do not know about peacebuilding, what works and what does not, let alone the activities that broadly define it. At a time when the international community’s resources to international development and aid are under strain due to tightened national budgets and stress from humanitarian action, the need to understand and invest in building peace is more crucial than ever. While the world lost US$ 742 billion to violent conflict in 2015, it spent only a corresponding 2% of that on building and keeping peace.

The world today faces increasing risks of fragility, conflict and violence that pose a serious challenge to economic development and stability, affecting developed and developing countries alike. Poverty is increasingly concentrated in fragile and conflict-affected countries with more than half of the global poor expected to live in just 35 countries by 2030.¹ Globally, trends such as climate change, demographic shifts, new technologies and transnational ideological movements are significantly shaping the fragility landscape at local, national and regional levels. Ongoing conflicts are at the origin of protracted crises situations and are intensifying the food insecurity of millions of people. They are also causing widespread displacement and other cross-border spill-overs. Today, a reported 65 million people are forcibly displaced, of which 21 million with refugee status. These risks and challenges have underscored the need for the global community to take collective action, help manage volatility and invest in building peaceful and resilient societies and states.

The parallel ‘sustaining peace resolutions’ asked the United Nations Secretary-General to ‘provide options on increasing, restructuring and better prioritising funding dedicated to United Nations peacebuilding activities, including through assessed and voluntary contributions, with a view to ensuring sustainable financing’. An ad-hoc working group, established by the former Deputy Secretary-General in June 2016, consisting of experts from across the UN system, have since worked to develop these financing options across different tracks. One of these tracks includes exploring the existence and potential of innovative financing mechanisms and approaches for sustaining peace.

More than one billion people have lifted themselves out of poverty in the past 15 years, but climate and disaster risks threaten these achievements. Global economic losses from disasters are now reaching an average of more than US$ 300 billion a year. According to a recent World Bank report, when accounting for impacts on well-being, disasters actually cost the global economy 60% more than the economic losses usually reported (US$ 520 billion) and force some 26 million people into poverty every year. Furthermore countries face increasingly complex threats that often compound the negative impacts of disaster and climate shocks – from migration caused by fragility and conflict situations, to the risk of pandemics. For instance, it is estimated that 93% of people facing extreme poverty today are living in countries that are politically fragile or environmentally vulnerable and, in many cases, both. The United Nation’s (UN) humanitarian appeal for 2017 stands at a record US$ 22.2 billion to help almost 93 million people affected by conflicts and natural disasters.