Five Transformative Shifts

The Panel views five big, transformative shifts as the priorities for a forward-looking, compelling and integrated sustainable development agenda based on the Rio principles. The first four shifts are where the focus for action is mostly at the country level, while the fifth transformative shift, forging a new global partnership, is an overarching change in international cooperation that provides the policy space for domestic transformations.

We believe there is a need for a paradigm shift, a profound structural transformation that will overcome the obstacles to sustained prosperity.

The transformations described below apply to all countries. They are universally relevant and actionable. The details may vary, and responsibilities and accountabilities will inevitably differ, in line with the circumstances and capabilities of each country. We recognise that there are enormous differences among countries in resources and capabilities, differences rooted in long-ago history and often beyond their individual control. But every country has something to contribute. Countries are not being told what to do: each country is being asked what it wants to do, on a voluntary basis, both at home and to help others in meeting jointly identified challenges.

1. Leave No One Behind

The next development agenda must ensure that in the future neither income nor gender, nor ethnicity, nor disability, nor geography, will determine whether people live or die, whether a mother can give birth safely, or whether her child has a fair chance in life. We must keep faith with the promise of the MDGs and now finish the job. The MDGs aspired to halve poverty. After 2015 we should aspire to put an end to hunger and extreme poverty as well as addressing poverty in all its other forms. This is a major new commitment to everyone on the planet who feels marginalised or excluded, and to the neediest and most vulnerable people, to make sure their concerns are addressed and that they can enjoy their human rights.

The new agenda must tackle the causes of poverty, exclusion and inequality. It must connect people in rural and urban areas to the modern economy through quality infrastructure – electricity, irrigation, roads, ports, and telecommunications. It must provide quality health care and education for all. It must establish and enforce clear rules, without discrimination, so that women can inherit and own property and run a business, communities can control local environmental resources, and farmers and urban slum-dwellers have secure property rights. It must give people the assurance of personal safety. It must make it easy for them to follow their dreams and start a business. It must give them a say in what their government does for them, and how it spends their tax money. It must end discrimination and promote equality between men and women, girls and boys.

These are issues of basic social justice. Many people living in poverty have not had a fair chance in life because they are victims of illness or poor healthcare, unemployment, a natural disaster, climate change, local conflict, instability, poor local leadership, or low-quality education – or have been given no schooling at all. Others face discrimination. Remedying these fundamental inequalities and injustices is a matter of respect for people’s universal human rights. A focus on the poorest and most marginalised, a disproportionate number of whom are women, follows directly from the principles agreed to in the Millennium Declaration and at Rio. These principles should remain the foundation of the post-2015 agenda.

To be sure that our actions are helping not just the largest number of people, but the neediest and most vulnerable, we will need new ways of measuring success. Strategies and plans will have to be developed to reach those not adequately covered by existing programmes. The cost of delivering services in remote areas may be only 15 to 20 per cent higher than average, to judge by practical experience in many countries. This seems reasonable and affordable, given higher tax revenues expected in most countries, and sustained aid to the lowest income countries. Above all it is the right thing to do.

2. Put Sustainable Development at the Core

For twenty years, the international community has aspired to integrate the social, economic, and environmental dimensions of sustainability, but no country has yet achieved patterns of consumption and production that could sustain global prosperity in the coming decades. A new agenda will need to set out the core elements of sustainable lifestyles that can work for all.

The Panel is convinced that national and local governments, businesses and individuals must transform the way they generate and consume energy, travel and transport goods, use water and grow food. Especially in developed countries, incentives and new mind-sets can spark massive investment in moving towards a green economy in the context of sustainable development and poverty eradication, while promoting more sustainable and more efficient consumption and production. Developing countries, when they get access to new technologies, can leapfrog straight to new, more sustainable and more efficient consumption and production. Both approaches are simply smart public policy.

It is sometimes argued that global limits on carbon emissions will force developing countries to sacrifice growth to accommodate the lifestyles of the rich, or that developed countries will have to stop growing so that developing countries can develop – substituting one source of pollution for another. We do not believe that such trade-offs are necessary. Mankind’s capacity for innovation, and the many alternatives that already exist, mean that sustainable development can, and must, allow people in all countries to achieve their aspirations.

At least one-third of the activities needed to lower global carbon emissions to reasonable levels, such as switching to LED lighting to conserve electricity, more than pay for themselves under current market conditions. Consumers will pay more up front if they can see future savings clearly and if the right incentives are in place to make the switch. Examples abound of smart, feasible, cost-effective, green economy policies: improved vehicle aerodynamics, constructing buildings for energy efficiency, recycling waste, generating electricity from landfill gas—and new technologies are constantly coming on-stream. But concerted efforts are needed to develop and adopt them.

There are other ways to reduce carbon emissions at very little cost; for example restoring soil, managing grasslands and forests in a sustainable way. Healthcare costs can fall significantly with a switch to clean transport or power generation, helping offset the costs. But incentives – taxes, subsidies and regulations – must be in place to encourage this – incentives that are largely not in place now. With the right incentives, and some certainty about the rules, many of the world’s largest companies are prepared to commit themselves to moving to sustainable modes of production on a large scale.

In developing countries too, the benefits of investing in sustainable development are high, especially if they get access to new technologies. Small investments to allow cross-border trading in electricity could save sub-Saharan Africa $2.7 billion every year, by substituting hydro for thermal power plants. Sustainable production is far cheaper than “Grow now, clean later.”

Already, some industries have developed global standards to guide foreign investment in sustainable development. Examples can be found in mining, palm oil, forestry, agricultural land purchases, and banking. Certification and compliance programmes put all companies on the same footing.

As more industries develop sustainability certification, it will be easier for civil society and shareholders to become watchdogs, holding firms accountable for adhering to industry standards and worker safety issues, and being ready to disinvest if they do not. Today, however, only 25 per cent of large companies report to shareholders on sustainability practices; by 2030, this should be commonplace.

3. Transform Economies for Jobs and Inclusive Growth

The Panel calls for a quantum leap forward in economic opportunities and a profound economic transformation to end extreme poverty and improve livelihoods. There must be a commitment to rapid, equitable growth – not growth at any cost or just short-term spurts in growth, but sustained, long-term, inclusive growth that can overcome the challenges of unemployment (especially youth unemployment), resource scarcity and – perhaps the biggest challenge of all – adaptation to climate change. This kind of inclusive growth has to be supported by a global economy that ensures financial stability, promotes stable, long-term private financial investment, and encourages open, fair and development-friendly trade.

The first priority must be to create opportunities for good and decent jobs and secure livelihoods, so as to make growth inclusive and ensure that it reduces poverty and inequality. When people escape from poverty, it is most often by joining the middle class, but to do so they will need the education, training and skills to be successful in the job market and respond to demands by business for more workers. Billions more people could become middle-class by 2030, most of them in cities, and this would strengthen economic growth the world over. Better government policies, fair and accountable public institutions, and inclusive and sustainable business practices will support this and are essential parts of a post-2015 agenda.

A second priority is to constantly strive to add value and raise productivity, so that growth begets more growth. Some fundamentals will accelerate growth everywhere – infrastructure and other investments, skills development, supportive policies towards micro, small and medium sized enterprises, and the capacity to innovate and absorb new technologies, and produce higher quality and a greater range of products. In some countries, this can be achieved through industrialisation, in others through expanding a modern service sector or intensifying agriculture. Some specialise, others diversify. There is no single recipe. But it is clear that some growth patterns – essentially those that are supported by open and fair trade, globally and regionally – offer more opportunities than others for future growth.

Third, countries must put in place a stable environment that enables business to flourish. Business wants, above all, a level playing field and to be connected to major markets. For small firms, this often means finding the right business linkages, through supply chains or cooperatives, for example. Business also wants a simple regulatory framework which makes it easy to start, operate and close a business. Small and medium firms, that employ the most people, are especially hamstrung at present by unnecessarily complicated regulations that can also breed corruption. This is not a call for total deregulation: social and environmental standards are of great importance. But it is a call for regulation to be smart, stable and implemented in a transparent way. Of course, businesses themselves also have a role to play: adopting good practices and paying fair taxes in the countries where they operate, and being transparent about the financial, social and environmental impact of their activities.

Fourth, in order to bring new prosperity and new opportunities, growth will also need to usher in new ways to support sustainable consumption and production, and enable sustainable development. Governments should develop and implement detailed approaches to encourage sustainable activities and properly cost environmentally and socially hazardous behaviour. Business should indicate how it can invest to reduce environmental stresses and improve working conditions for employees.

4. Build Peace and Effective, Open and Accountable Public Institutions

Freedom from conflict and violence is the most fundamental human entitlement, and the essential foundation for building peaceful and prosperous societies. At the same time, people the world over want their governments to be transparent, accountable and responsive to their needs. Personal security, access to justice, freedom from discrimination and persecution, and a voice in the decisions that affect their lives are development outcomes as well as enablers. So we are calling for a fundamental shift—to recognise peace and good governance as core elements of well-being, not an optional extra.

Capable and responsive states need to build effective and accountable public institutions that support the rule of law, freedom of speech and the media, open political choice, and access to justice. We need a transparency revolution so citizens can see exactly where their taxes, aid and revenues from extractive industries are spent. We need governments that tackle the causes of poverty, empower people, are transparent, and permit scrutiny of their affairs.

Transparency and accountability are also powerful tools for preventing the theft and waste of scarce natural resources. Without sound institutions, there can be no chance of sustainable development. The Panel believes that creating them is a central part of the transformation needed to eradicate poverty irreversibly and enable countries across the world, especially those prone to or emerging from conflict, to develop sustainably – and that therefore institutions must be addressed in the new development agenda.

Societies organise their dialogues through institutions. In order to play a substantive role, citizens need a legal environment which enables them to form and join CSOs, to protest and express opinions peacefully, and which protects their right to due process.

Internationally, too, institutions are important channels of dialogue and cooperation. Working together, in and through domestic and international institutions, governments could bring about a swift reduction in corruption, money laundering, tax evasion and aggressive avoidance, hidden ownership of assets, and the illicit trade in drugs and arms. They must commit themselves to doing so.

5. Forge a new Global Partnership

A fifth, but perhaps most important, transformative shift for the post-2015 agenda is to bring a new sense of global partnership into national and international politics. This must provide a fresh vision and framework, based on our common humanity and the principles established at Rio. Included among those principles: universality, equity, sustainability, solidarity, human rights, the right to development and responsibilities shared in accordance with capabilities. The partnership should capture, and will depend on, a spirit of mutual respect and mutual benefit.

One simple idea lies behind the principle of global partnership. People and countries understand that their fates are linked together. What happens in one part of the world can affect us all. Some issues can only be tackled by acting together. Countries have resources, expertise or technology that, if shared, can result in mutual benefit. Working together is not just a moral obligation to help those less fortunate but is an investment in the long-term prosperity of all.

A renewed global partnership will require a new spirit from national leaders, but also – no less important – it will require many others to adopt new mind-sets and change their behaviour. These changes will not happen overnight. But we must move beyond business-as-usual – and we must start today. The new global partnership should encourage everyone to alter their worldview, profoundly and dramatically. It should lead all countries to move willingly towards merging the environmental and development agendas, and tackling poverty’s symptoms and causes in a unified and universal way.

What are the components of a new global partnership? It starts with a shared, common vision, one that allows different solutions for different contexts but is uniformly ambitious. From vision comes a plan for action, at the level of the individual country and of smaller regions, cities or localities. Each needs to contribute and cooperate to secure a better future.

A new global partnership should engage national governments of all countries, local authorities, international organisations, businesses, civil society, foundations and other philanthropists, and people – all sitting at the table to go beyond aid to discuss a truly international framework of policies to achieve sustainable development. It should move beyond the MDGs’ orientation of state-to-state partnerships between high-income and low-income governments to be inclusive of more players.

A new global partnership should have new ways of working – a clear process through which to measure progress towards goals and targets and to hold people accountable for meeting their commitments. The United Nations can take the lead on monitoring at the global level, drawing on information from national and local governments, as well as from regional dialogues. Partnerships in each thematic area, at global, national and local levels, can assign responsibilities and accountabilities for putting policies and programmes in place.

Each participant in the global partnership has a specific role to play:

National governments have the central role and responsibility for their own development and for ensuring universal human rights. They decide on national targets, taxes, policies, plans and regulations that will translate the vision and goals of the post-2015 agenda into practical reality. They have a role in every sector and at many levels – from negotiating international trade or environmental agreements to creating an enabling environment for business and setting environmental standards at home.

Developed countries must keep their promises to developing countries. North-South aid is still vital for many countries: it must be maintained, and increased wherever possible. But more than aid is needed to implement sustainable development worldwide. Developed countries are important markets and exporters. Their trade and agriculture practices have huge potential to assist, or hinder, other countries’ development. They can encourage innovation, diffusion and transfer of technology. With other major economies, they have a central role in ensuring the stability of the international financial system. They have special responsibilities in ensuring that there can be no safe haven for illicit capital and the proceeds of corruption, and that multinational companies pay taxes fairly in the countries in which they operate. And, as the world’s largest per-capita consumers, developed countries must show leadership on sustainable consumption and production and adopting and sharing green technologies.

Developing countries are much more diverse than when the MDGs were agreed – they include large emerging economies as well as countries struggling to tackle high levels of deprivation and facing severe capacity constraints. These changing circumstances are reflected in changing roles. Developing country links in trade, investment, and finance are growing fast. They can share experiences of how best to reform policy and institutions to foster development. Developing countries, including ones with major pockets of poverty, are cooperating among themselves, and jointly with developed countries and international institutions, in South-South and Triangular cooperation activities that have become highly valued. These could be an even stronger force with development of a repository of good practices, networks of knowledge exchange, and more regional cooperation.

Local authorities form a vital bridge between national governments, communities and citizens and will have a critical role in a new global partnership. The Panel believes that one way to support this is by recognising that targets might be pursued differently at the sub-national level – so that urban poverty is not treated the same as rural poverty, for example.

Local authorities have a critical role in setting priorities, executing plans, monitoring results and engaging with local firms and communities. In many cases, it is local authorities that deliver essential public services in health, education, policing, water and sanitation. And, even if not directly delivering services, local government often has a role in establishing the planning, regulatory and enabling environment—for business, for energy supply, mass transit and building standards. They have a central role in disaster risk reduction – identifying risks, early warning and building resilience. Local authorities have a role in helping slum-dwellers access better housing and jobs and are the source of most successful programmes to support the informal sector and micro-enterprises.

International institutions will play a key role. The United Nations, of course, has a central normative and convening role, and can join partnerships through its development funds, programmes and specialised agencies. International financial institutions can compensate for the market’s failures to supply long-term finance for sustainable projects in low- and middle-income countries, but they need to be more innovative, flexible and nimble in the way they operate. The Panel noted the huge potential to use public money to catalyse and scale up private financing for sustainable development. For example, only 2 per cent of the $5 trillion in sovereign wealth fund assets has so far been invested in sustainable development projects.

Business is an essential partner that can drive economic growth. Small- and medium-sized firms will create most of the jobs that will be needed to help today’s poor escape poverty and for the 470 million who will enter the labour market by 2030. Large firms have the money and expertise to build the infrastructure that will allow all people to connect to the modern economy. Big businesses can also link microenterprises and small entrepreneurs with larger markets. When they find a business model that works for sustainable development, they can scale it up fast, using their geographic spread to reach hundreds of millions of people.

A growing number of business leaders with whom we discussed these issues are already integrating sustainable development into their corporate strategies. They spoke of a business case with three components that goes well beyond corporate social responsibility. First, use innovation to open up new growth markets, and address the needs of poor consumers. Second, promote sustainable practices and stay cost-competitive by conserving land, water, energy and minerals and eliminating waste. Third, attract the highest calibre employees and promote labour rights.

Many companies recognise, however, that if they are to be trusted partners of governments and CSOs, they need to strengthen their own governance mechanisms and adopt “integrated reporting”, on their social and environmental impact as well as financial performance. Many businesses today are committed to doing this; the new global partnership should encourage others to follow suit.

Civil society organisations can play a vital role in giving a voice to people living in poverty, who include disproportionate numbers of women, children, people with disabilities, indigenous and local communities and members of other marginalised groups. They have important parts to play in designing, realising, and monitoring this new agenda. They are also important providers of basic services, often able to reach the neediest and most vulnerable, for example in slums and remote areas.

In a new partnership, CSOs will have a crucial role in making sure that government at all levels and businesses act responsibly and create genuine opportunities and sustainable livelihoods in an open-market economy. Their ability to perform this role depends on an enabling legal environment and access to due process under the law, but they should also commit to full transparency and accountability to those whom they represent.

Foundations, other philanthropists and social impact investors can innovate and be nimble and opportunistic, forming bridges between government bureaucracies, international institutions and the business and CSO sectors. Foundations and philanthropists can take risks, show that an idea works, and create new markets where none existed before. This can give governments and business the confidence to take the initiative and scale up successes.

Social impact investors show that there can be a “third way” for sustainable development – a hybrid between a fully for-profit private sector and a pure grant or charity aid programmes. Because they make money, their efforts can be sustainable over time. But because they are new, neither business nor charity, they do not fall neatly into traditional legal frames. Some countries may need to consider how to modify their laws to take better advantage of this sector.

Scientists and academics can make scientific and technological breakthroughs that will be essential to the post-2015 agenda. Every country that has experienced sustained high growth has done so through absorbing knowledge, technology and ideas from the rest of the world, and adapting them to local conditions. What matters is not just having technology, but understanding how to use it well and locally. This requires universities, technical colleges, public administration schools and well-trained, skilled workers in all countries. This is one example of the need for the post-2015 agenda to go well beyond the MDG’s focus on primary education.

Energy is a good example of where a global technology breakthrough is needed. When governments cooperate with academia and the private sector, new ways of producing clean and sustainable energy can be found and put into practice. This needs to happen quickly: the infrastructure decisions of today will affect the energy use of tomorrow.

Science in many fields, like drought-resistant crops, can be advanced by using open platforms where scientists everywhere have access to each other’s findings and can build on them freely and collaborate broadly, adding useful features without limit. Open platform science can speed the development of new ideas for sustainable development and rapidly bring them to scale. It can support innovation, diffusion and transfer of technology throughout the world.

People must be central to a new global partnership. To do this they need the freedom to voice their views and participate in the decisions that affect their lives without fear. They need access to information and to an independent media. And new forms of participation such as social media and crowd-sourcing can enable governments, businesses, CSOs and academia to interact with, understand and respond to citizens’ needs in new ways.

Ensure More and Better Long-term Finance

The Panel believes that most of the money to finance sustainable development will come from domestic sources, and the Panel urges countries to continue efforts to invest in stronger tax systems, broaden their domestic tax base and build local financial markets. Low- and middle-income country governments have made great strides in raising domestic revenues, and this has helped expand public services and investments, vital for sustainable growth, as well as creating ownership and accountability for public spending.

But developing countries will also need substantial external funding. The main part of this will not be aid from developed countries, although aid remains vital for low-income countries and the promises made on aid must be kept. The most important source of long-term finance will be private capital, coming from major pension funds, mutual funds, sovereign wealth funds, private corporations, development banks, and other investors, including those in middle-income countries where most new savings will come from by 2030. These private capital flows will grow and become less prone to sudden surges and stops, if the global financial system is stable and well regulated, and if they finance projects backstopped by international financial institutions.

The money is there – world savings this year will likely be over $18 trillion – and sponsors of sustainable projects are searching for capital, but new channels and innovative financial instruments are needed to link the two. Support systems (know-how, financial institutions, policies, laws) must be built and, where they exist, must be strengthened.

A broad vision of how to fund development has already been agreed by governments at a conference held in Monterrey, Mexico in 2002. The Monterrey Consensus agreed that “each country has primary responsibility for its own economic and social development, and the role of national policies and development strategies cannot be overemphasised. At the same time, domestic economies are now interwoven with the global economic system…” So these efforts should be supported by commitments made on aid, trade and investment patterns, as well as technical cooperation for development.

The Panel believes the principles and agreements established at Monterrey remain valid for the post-2015 agenda. It recommends that an international conference should take up in more detail the question of finance for sustainable development. This could be convened by the UN in the first half of 2015 to address in practical terms how to finance the post-2015 agenda. The Panel suggests that this conference should discuss how to integrate development, sustainable development and environmental financing streams. A single agenda should have a coherent overall financing structure.