A new tool for boosting SDG investment through PPPs

What do an urban e-mobility project in Slovenia, a metro rail project in Mexico, a juvenile detention center in Brazil, and an urban tram in Tunisia have in common? These PPP projects have all used the UNECE PPP Evaluation Methodology for the SDGs to evaluate the extent to which they contribute to the Sustainable Development Goals (SDGs).

The main objective of this evaluation methodology is to assist governments in particular—but also businesses, lenders, and debt providers—in how they identify, design, and implement infrastructure projects and deliver public services that comply with the SDGs.

How can we measure the impact of existing PPPs and infrastructure projects? How can we ensure that new projects contribute to poverty reduction, gender equality, women’s empowerment, local job creation, the circular economy, the use of renewable energy, and, ultimately, that they help improve people’s lives?  

This was exactly the goal of an initiative led by the UN Economic Commission for Europe (UNECE): to develop an evaluation methodology as a mechanism to mobilize all stakeholders’ efforts to achieve the 2030 Agenda for Sustainable Development through PPPs and infrastructure finance.

Private finance is needed to deliver the SDGs

In the current context of multiple crises, the outlook for the world economy is rapidly worsening. UNCTAD estimates that $4.3 trillion per year is now needed in developing countries to meet the SDGs, with current rates of investment in SDG-related sectors nowhere near this figure.  

Furthermore, at the current pace of progress and already halfway through the 2030 Agenda, the latest trends show that the UNECE region will only achieve 25 per cent of the SDG targets by 2030. More worryingly, progress towards SDG target 9.1—infrastructure development—is regressing in our region.

Put simply, we will not be able to close the infrastructure funding gap and deliver the SDGs by 2030 without the mobilization of billions of dollars, most of which has to come from private finance. 

The UNECE approach to PPPs for the SDGs

Effective partnership with the private sector—including through PPPs—is recognized in the 2030 Agenda as key to achieving the SDGs.  However, as ‘traditional’ PPPs are considered by many as not ‘fit for purpose’ for the SDGs, the UNECE has pioneered the “PPPs for the SDGs” approach to ensure that PPPs and infrastructure projects contribute equally to the three sustainability pillars: social, economic, and environmental.

This innovative approach is based on five desirable outcomes and 10 Guiding Principles that put people’s interest and the planet at the core of infrastructure projects. The evaluation methodology complements other methodologies in the market, including the various ESG tools used by governments and lenders in their investment strategies.

The infrastructure of the future must be sustainable 

Differentiating sustainable infrastructure projects that are fit for purpose for the SDGs from the rest is thus crucial not only to prioritize investments but also to help mobilize private financing and innovation capabilities  in SDG-compliant infrastructure projects. 

In this regard, the evaluation methodology, in its self-assessment form, can help governments improve their project preparation process. With 22 criteria, 95 indicators, and a weighing and scoring system, this tool provides an indicative score and recommendations to improve project performance against the SDGs. 

More importantly, the methodology can also help governments demonstrate that their infrastructure projects score high on ESG principles, an increasingly critical requirement from debt providers and investors.

Towards an internationally recognized methodology

I am proud that UNECE has led this international initiative to develop an evaluation methodology to assess the contribution of infrastructure projects to the SDGs. 

Now that the member states in our region and beyond have adopted it, I am pleased to see that it is being used not only by governments and other UN entities but also by other partners, including the multilateral development banks. 

Indeed, the methodology is gaining international recognition as a useful tool. As such, I hope that it will help all stakeholders make progress in delivering on the SDGs and contribute to solving the world’s most pressing challenges.

Note to the editor: The UNECE PPP Evaluation Methodology for the SDGs has been developed by over 100 international experts over two years in 2020-2021 and has been tested on over 60 projects before it became fully functional. The UNECE is rolling out this methodology in the UNECE region and beyond, through technical assistance to its member states. It is available online in its self-assessment form, free of charge, on this page.