The United Nations Development Programme, Istanbul International Center for Private Sector in Development (UNDP ICPSD) contributed to the Academy of Sustainable Finance, Accounting and Governance (ASFAAG) MENA Chapter’s workshop through a presentation on impact investing which included UNDP ICPSD’s work in this field, and by participating in focused discussions on sustainable finance topics. The workshop entitled “Future Trends in Accounting, Finance, and Governance in Climate Change” was held on 16 August in Istanbul, Türkiye, and conducted in collaboration with the Istanbul Chamber of Commerce Centre for Strategic Research (ITOSAM). It brought together academics, practitioners and policymakers from institutions including UNDP, the Organisation of Islamic Cooperation, Türkiye Wealth Fund and Istanbul Development Agency for discussions around sustainable finance, accounting, accountability, governance and possible collaboration areas.

During the workshop, UNDP ICPSD highlighted the estimated US$4.2 trillion annual gap in SDG financing in developing countries and noted that aligning just 1 percent of global wealth with the SDGs could bridge this gap.[i] The presentation also highlighted the importance of impact investing as a viable solution to channel much needed financing for social and environmental benefits, referencing the $1.164 trillion worth of impact assets under management in 2022.[ii]

Discussions underlined the significant gap in impact investment between developed and emerging markets, particularly in the MENA region. Mr. Charles Selestine, Islamic Finance Impact Investing Portfolio Lead at UNDP ICPSD quoted:

“81 percent of organizations deploying an impact investing strategy are headquartered in North America and Europe, while only 2 percent of these organizations base their headquarters in the MENA region. Organizations based in the MENA region account for only 1 percent of the impact assets under management allocated globally, compared to 92 percent by organizations headquartered in developed markets.”[iii]

The presentation listed the main challenges to growing impact investment in the least-developed countries and developing countries, which include a lack of awareness and capacity around how to structure impact investments and a lack of appropriate financial instruments and high-quality investment options with track records across the spectrum of risk and return expectations by investors. Additionally, the presentation addressed insufficient legal and regulatory frameworks around impact investment, as well as the need for effective policy incentives to mobilize private sector resources, and investors’ and impact enterprises’ limited capacities in impact measurement and management.  Further, UNDP ICPSD  drew attention to the issue of ‘impact washing’ and highlighted UNDP’s SDG Impact Standards as a useful tool for enterprises, bond issuers and private equity funds to develop their strategies, transparency, management approach and governance.

Under its impact investing workstream, UNDP ICPSD conducts research, capacity-building and advocacy activities to address these challenges. Among these, SDG Investor Maps guide investors towards opportunities aligned with national strategic priorities in countries including Morocco, Türkiye and Ukraine, whilst Investor Convenings foster collaboration and partnerships around sustainable finance in Djibouti, Mauritius and Tanzania.

Additionally, UNDP ICPSD and Islamic Development Bank’s (IsDB) joint initiative, the Global Islamic Finance and Impact Investing Platform (GIFIIP), provides technical assistance and capacity-building on Islamic finance and impact investing in Afghanistan, Bangladesh, Djibouti and Uzbekistan, supports green Sukuk issuances in OIC countries, and promotes Islamic fintech solutions for the least-developed countries.  

UNDP ICPSD has also undertaken the development of the Massive Open Online Course (MOOC) on Islamic finance for the SDGs, which is the first of its kind designed for the capacity-building of development professionals and Islamic finance partners to leverage Islamic finance sources for sustainable development.

[i] UNCTAD, World Investment Report, 2023

OECD, Global Outlook on Financing for Sustainable Development, 2021

[ii] Hand, D., Ringel, B., Danel, A. (2022) Sizing the Impact Investing Market: 2022. The Global Impact Investing Network (GIIN). New York.

[iii] Ibid.