Long reads

The future of ESGTech: Goal 8 - Decent work and economic growth

Paige McNamee

Paige McNamee

Senior Reporter, Finextra

Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. This is an extract from Finextra's The Future of ESGTech 2022 report.

Focus target 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all.

The pandemic wreaked havoc on unemployment figures across the globe, and while figures aren’t complete, the UN states that global unemployment increased by 33 million during 2020. Increasing the unemployment rate by 1.1% to 6.5%. Sadly, women and young people were impacted more severely, with employment losses in 2020 of 5% and 8.7% respectively.

Given these unsatisfactory statistics, it is now more important than ever to increase access to financial tools, products, and services so that individuals – particularly those in positions of hardship – are supported not only in finding employment, but in their ability to find financial security. In an increasingly digital world, an important factor in providing this access lies in the availability of data infrastructure.

A survey by KPMG and the European Banking Foundation (EBF) found that SDG 8 is the most relevant SDG to their activity: “Banks play a major role in communities, promoting the use of savings accounts, conducting financial literacy programmes, increasing financial inclusion for vulnerable customers and promoting entrepreneurship and SME development to contribute to the creation of employment.”

The Islamic Development Bank (ISDB) argues that institutions such as the IMF, World Bank and other multilateral development banks retain focus on the longer-term objectives embodied in the SDGs, including the types of infrastructure investments that can drive economic growth. Quoting Kristalina Georgieva, managing director, International Monetary Fund, the ISDB report noted that “Progress in these areas will depend importantly on domestic revenue mobilisation as well as external public and private financing.”The availability of and access to data infrastructure is a fundamental component in the push toward decent work and economic growth. According to The World Bank Group’s 2021 report ‘Data for Better Lives,’ numerous studies have found broadband infrastructure boosts economic growth, increasing productivity and employment while enabling digital enterprises.

For instance, fibre-optic submarine cables in Africa have led to the entry of new firms, increased productivity and higher exports. Reliance on data-enabled services is only becoming more prevalent, and poor countries must not be excluded from associated opportunities because of a lack of data infrastructure.

Export opportunities associated with data-enabled services opens access for new entrants to global trade, and would work to improve economic growth for countries traditionally without access to global markets.

The Indian digital services industry, cited by the World Bank Group report, has created employment especially for women and in smaller cities with populations of about one million or less, which can help bridge economic and social inequalities. The rise in Indian services exports has also been associated with gains in per-capita income and a decline in urban and rural poverty headcount ratios.

An essential factor in keeping track of progress around specific SDGs is the ability to access and analyse both public and private intent data. Private intent data – that which is collected by the private sector as part of routine business processes – is of particular value, and is being used to track policy goals and to benchmark policy priorities.

The World Bank Group report stated that these initiatives are invaluable because they provide unique and comparable data across countries that are not collected by national governments. Additionally, “the data being harvested and disseminated to promote financial inclusion have been widely recognised by policy makers as critical to reducing poverty and achieving inclusive economic growth.”

The Global Findex database is a clear example of how this data can be leveraged for good. Established in partnership with polling from Gallup Inc, the database is the world’s most comprehensive for data on how adults save, borrow, make payments and manage risks. It has become a “mainstay” of efforts and initiatives promoting financial inclusion, and has been used to track progress toward universal financial access under SDG8.

As part of its Pledge 2025 initiative, BBVA exemplifies how certain financial institutions are working toward improving decent work and economic growth in four key courses of action; entrepreneurship, financial inclusion, diversity policies, and freedom of assembly. The bank and its various foundations will devote €550 million to fund social initiatives aimed at fostering inclusive growth in the countries where the bank is present between now and 2025.

Specifically targeting the needs of SDG 8, the bank’s Microfinance Foundation (FMBBVA) will originate €7 billion in micro-loans to support 2.5 million vulnerable entrepreneurs. According to the OECD, FMBBVA is Latin America’s leading and the world’s second largest private philanthropic organisation contributing to development.

The bank is also working to fight social and economic inequality by allocating approximately €115 million to support organisations which focus on providing social assistance, as well as digital empowerment initiatives in the hope of benefitting over three million people. Additionally, the bank is providing around €40 million to the funding of non-financial support programs to support social, environmental and vulnerable entrepreneurs.

ACTION FOR 2022: Increase access to financial tools so individuals are supported in finding employment.

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