Local data key to sustainable development

Developing world can rectify many mistakes of modern development by identifying and using cleaner forms of energy and creating a more equitable future

The Intergovernmental Panel on Climate Change’s (IPCC’s) most recent report has made the strongest call yet for rapid action on climate change. The stakes are clear: We need to up our game or face the grave consequences of a three degrees+ Celsius world. That requires the sharing of knowledge and expertise among those affected and credible data for investors to assess.

Getting real on climate change means understanding that millions and billions of investments aren’t enough anymore. Meaningful action on climate change while also achieving the Sustainable Development Goals requires trillions of dollars of investment in the coming years — money that isn’t currently flowing and which the public sector alone simply doesn’t have.

To accelerate investment, our focus now needs to urgently shift towards providing investors with the information they need to commit sufficient funds and create conditions within which local markets can grow to rise to the challenge.

First and foremost, this means providing stable, reliable, standardised and comparable data to guide investment decisions. Second, it means taking a more holistic approach to how we assess the impact of business decisions, looking across the pillars of action to achieve the sustainable development goals (SDGs) and accelerating domestic ownership of knowledge and entrepreneurial growth in local markets. Evidence, knowledge and local understanding are critical to achieving this.

Recognition of the systemic impact of our economic choices is also vital. That means building knowledge of investment and performance in energy and climate change, water, agriculture, electrification and mobility, biotech, as well as facilitative technologies from Internet of Things to Artificial Intelligence. The only way to really do this effectively over time is at a local level, where people have a visceral understanding of how the world around them is changing. We cannot succeed at this without finding new ways to access, analyse and assess the data underlying financial decisions and their impact.

Where we see considerably less focus, however, is in using these principles and approaches in the development of markets in developing countries. A critical part of the process is catalysing funds committed to the developing world in order to ensure that development advances in a sustainable fashion. Yet, there is little centralised, standardised and reliable data from developing and transition economies and without data, investors are wary of commitment while policymakers can be slow to be convinced.

Providing a database

The Climate and Sustainable Finance Database will enable researchers, practitioners and others with an interest to see not only how much public and private money is flowing to and from developing and transition economies, but also to better understand both positive and negative impacts, enabling factors and barriers. This information can, in turn, be used to accelerate further flows of finance and enhance the effectiveness of existing investment.

Critically, the initiative will provide database and research training as well as digital learning on climate and sustainable finance to centres in the developing world. The long-term goal is for domestic research groups to become centres of climate and sustainability entrepreneurialism, sharing financial and business models that work for specific markets.

By working together, there is an opportunity for the developing world to leapfrog many of the mistakes of modern development, identifying and using cleaner forms of energy, protecting land and livelihoods and, at the same time, creating a more equitable future. If we can do this through the process of encouraging far greater investment in climate-friendly, sustainable development in the markets most in need, we might have an actual shot at solving the climate crisis.

■ Felicia Jackson is an author and founding editor, Bloomberg New Energy Finance.

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