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‘Industry 4.0’ tech for post-COVID world, is driving inequality: UNCTAD

“Very few countries create the technologies that drive this revolution – most of them are created in China and the US – but all countries will be affected by it”, said UNCTAD’s Shamika Sirimanne, head of Division on Technology and Logistics. “Almost none of the developing countries we studied is prepared for the consequences.”

The appeal, which is highlighted in a new UNCTAD report, relates to all things digital and connective, so-called “Industry 4.0” or “frontier technologies”, that include artificial intelligence, big data, blockchain, 5G, 3D printing, robotics, drones, nanotechnology and solar energy.

Gene editing, another fast-evolving sector, has demonstrated its worth in the last year, with the accelerated development of new coronavirus vaccines.

Drone aid

In developing countries, digital tools can be used to monitor ground water contamination, deliver medical supplies to remote communities via drones, or track diseases using big data, said UNCTAD’s Sirimanne.

But “most of these examples remain at pilot level, without ever being scaled-up to reach those most in need: the poor. To be successful, technology deployment must fulfil the five As: availability, affordability, awareness, accessibility, and the ability for effective use.”

Income gap widening

With an estimated market value of $350 billion today, the array of emerging digital solutions for life after COVID is likely to be worth over $3 trillion by 2025 – hence the need for developing countries to invest in training and infrastructure to be part of it, Sirimanne maintained.

“Most Industry 4.0 technologies that are being deployed in developed countries save labour in routine tasks affecting mid-level skill jobs. They reward digital skills and capital”, she said, pointing to the significant increase in the market value of the world’s leading digital platforms during the pandemic.

Innovation dividends

“The largest gains have been made by Amazon, Apple and Tencent,” Sirimanne continued. “This is not surprising given that a very small number of very large firms provided most of the digital solutions that we have used to cope with various lockdowns and travel restrictions.”

Expressing optimism about the potential for developing countries to be carried along with the new wave of digitalisation rather than be swamped by it, the UNCTAD economist downplayed concerns that increasing workforce automation risked putting people in poorer countries out of a job.

This is because “not all tasks in a job are automated, and, most importantly, that new products, tasks, professions, and economic activities are created throughout the economy”, Sirimanne said.

‘Job polarization’

“The low wages …for skills in developing countries plus the demographic trends will not create economic incentives to replace labour in manufacturing – not yet.”

According to UNCTAD, over the past two decades, the expansion in high and low-wage jobs – a phenomenon known as “job polarization” – has led to only a single-digit reduction in medium-skilled jobs in developed and developing countries (of four and six per cent respectively).

“So, it is expected that low and lower-middle income developing countries will be less exposed to potential negative effects of AI and robots on job polarization”, Sirimanne explained.

Nonetheless, the UN trade and development body cautioned that there appeared to be little sign of galloping inequality slowing down in the new digital age, pointing to data indicating that the income gap between developed and developing countries is $40,749 in real terms today, up from $17,000 in 1970.

ILO urges better policies to protect workers, businesses, as digital platforms proliferate

According to the agency, digital labour platforms – such as remote tasking, and location-based apps where workers are involved in transport or delivery – saw an almost five-fold increase over the last decade. This surge offered new opportunities and presented challenges for both workers and businesses, it added. 

“Digital labour platforms are opening up opportunities that did not exist before, particularly for women, young people, persons with disabilities and marginalized groups in all parts of the world. That must be welcomed”, Guy Ryder, ILO Director-General, said. 

The opportunities created by such platforms are, however, blurring the previously clear distinction between employees and the self-employed, said ILO.  

Working conditions are largely regulated by the platforms’ terms of service agreements laid out by businesses themselves, and algorithms are increasingly replacing humans in allocating and evaluating work, and human resources. 

“The new challenges they present can be met through global social dialogue so that workers, employers and governments can fully and equally benefit from these advances. All workers, regardless of employment status, need to be able to exercise their fundamental rights at work”, Mr. Ryder said. 

Furthermore, with platforms operating across multiple jurisdictions, coherent and coordinated policies are needed to ensure they provide decent work opportunities and foster the growth of sustainable businesses, ILO urged. 

Difficulties for workers and businesses 

In its new report, World Employment and Social Outlook 2021, ILO outlined challenges for digital platform workers, including over working conditions, hours and income, and the lack of access to social protection, freedom of association and collective bargaining rights. The COVID-19 pandemic has further exposed many of these issues. 

ILO noted that working hours can often be long and unpredictable, wages low, and, on some platforms, a significant gender pay gap exists. Businesses also face challenges such as those relating to unfair competition, non-transparency with regard to data and pricing, and high commission fees, it added. 

Furthermore, work on online web-based platforms is outsourced by businesses in the global North, and performed by workers in the global South, who earn less than their counterparts in developed countries, which could exacerbate inequalities and perpetuate the digital divide, ILO said. 

Overcoming challenges 

Against this backdrop, ILO urged broad dialogue and regulatory cooperation between digital labour platforms, workers and governments, which could lead over time to a more  

effective and consistent approach. 

Such efforts would also ensure that work status is correctly classified, in line with national classification systems; there is greater transparency and accountability of algorithms for workers and businesses; and workers can access the courts of the jurisdiction in which they are located if they so choose.

Lifeline for vulnerable Cambodians as poverty doubles during COVID-19 pandemic

Yom Malai, a recipient of Cambodia’s IDPoor cash transfer scheme., by Sok Chan

The government-issued IDPoor card has been providing Yom Malai, a 42-year-old single mother of four children living in the Battambang province of Cambodia, with a lifeline since May 2020. With the card, she is entitled to 176,000 riels (around $43.45) per month, to support herself and her family, using most of it to buy dry food ingredients and rice, products with a longer shelf life, that can be rationed throughout the month. 

“We collect the money from a money transfer service”, she says. “During the COVID-19 pandemic, it has been a great help for my family. In addition, if we ever need to go to the hospital, we get medical treatment, care and medicine free of charge”. 

No cash, cards only

As a result of the pandemic, poverty is forecast to almost double in Cambodia: the UN estimating that it could reach around 17.6 per cent of the population. With these stark predictions in mind, the government, alongside partners which include UNDP and the UN Children’s Fund (UNICEF), decided to strengthen the level of social protection in the country. The UN’s research indicated that an emergency social protection program would significantly improve both economic growth and the well-being of the most vulnerable.

The UN agencies, and other partners, focused on supporting the new “Cash Transfer Programme for Poor and Vulnerable Households”, by providing the digital tools needed to make it work smoothly and efficiently, and ensure that almost 700,000 people listed on the scheme’s database receive funds in a cashless form, either through their phone or, like Ms. Yom, via a card.

UNDP Cambodia/Kimheang Toun
A Cambodian woman is registered for the IDPoor card.

With support from the Government of Australia, UNDP supplied Cambodian Ministry of Planning employees around 1,700 tablet computers, and software, which allowed them to quickly register families that had recently fallen into poverty as a result of the economic slowdown.

“The Government of Australia and UNDP have provided these tablet computers to the Ministry of Planning so that all those registered as poor can receive a cash transfer”, says Nick Beresford, UNDP Cambodia’s Resident Representative. “This expands the UN’s work in social protection and helping the Royal Government of Cambodia build a robust and fully digital IDPoor Programme”. 

In Ms. Yom’s village, many households received the IDPoor card. “The officials registered our names in an electronic system so that everyone gets what they are entitled to”, she says, adding that each family first went through an interview process with local officials.

UNDP Cambodia/Kimheang Toun
Nick Beresford (left), UNDP Cambodia’s Resident Representative, visits a community which is benefiting from cash transfers.

Under the programme, each eligible and registered household receives either $20 or $30 a month, as a basic benefit. In addition, the household receives top-up amounts for members of vulnerable groups including pregnant women, children under 2, the elderly, people with disabilities and people living with HIV.

My family is classified as a level 1 poor household because I am a widow with four children. However, some poor households are struggling but, as their living standards are not as difficult, they are classified as level 2 poor households”, says Ms. Yom.

As well as supporting this emergency cash transfer programme, the UN is supporting the Cambodian Government in other ways. These include procuring critical medical equipment, ranging from bio-hazardous waste bags to ventilators and ambulances, and providing technical support to the Planning Ministry, by producing COVID-19 related communications and awareness raising materials.
 

East Asian countries led economic recovery in last quarter of 2020, says UN report

“The recovery process has been uneven, with many countries lagging”, said UNCTAD economist Alessandro Nicita.

According to a new report from the agency, exports from East Asia grew about 12 per cent in the last quarter of 2020, while imports increased by around five per cent.

These results followed growth of around three per cent in Chinese exports in the third quarter of the year compared with the same period in 2019, which was “the exception” to an overall downturn in nearly all major economies.

Negative trends the norm

In contrast to the market share gains for China and East Asian economies, most other regions saw continuing “negative trends”, UNCTAD said in its latest Global Trade Update.

These included Brazil – whose fourth quarter 2020 goods and services exports were down four per cent and 17 per cent respectively – Russia (19 per cent, 34 per cent), India (five per cent, eight per cent) and the United States (five per cent, 26 per cent).

By contrast, China saw a 17 per cent boost to exports in goods and a two per cent increase in services exports. South Africa also saw a 15 per cent rise in goods shipped abroad (with a 64 per cent drop in services exports) while both Japan and the European Union saw a three per cent increase in goods exports (and a 20 per cent and 14 per cent drop in services exports, respectively).

Generally, trade among countries in the Global South remained “well below average”, except for East Asian economies, UNCTAD said.

Energy and transport trailing

The UN analysts also noted that although most manufacturing sectors recorded positive trade growth in the last quarter of 2020, the main exceptions were the energy and transport sectors, linked to travel restrictions.

Dropping values

In terms of the global trade values, COVID-19 caused a drop of about nine per cent in 2020, UNCTAD found, with goods commerce down by about six per cent and services tumbling more than 16 per cent.

The UN agency explained that trade began to rebound in the third and particularly the fourth quarter of 2020, albeit not in services, which stagnated at the level they reached at the end of the third quarter.

Tentative projections for 2021 indicate a slowing recovery in goods exports (1.5 down on the last quarter of 2020) and a further decline in services (of a full seven per cent compared with the last quarter of 2020), largely because of continued disruptions in the travel sector. 

Social development key pillar for ‘sustainable and resilient’ world – Commission hears 

“The COVID-19 pandemic is a stark reminder of the key role social development plays in protecting people’s lives and livelihoods, as well as the planet”, Munir Akram, Pakistan’s UN Ambassador and the President of the Economic and Social Council (ECOSOC) told the in-person opening session of the Commission for Social Development in New York. 

He upheld that it is also “one of the critical pillars” for making the world “more sustainable and resilient”.  

Foster transformation 

Despite 25 years of extraordinary progress in human and social development, with a reduction in poverty, higher education standards, employment growth, rising incomes and increased longevity for hundreds of millions, Mr. Akram pointed out that “today, 26 people own half the world’s wealth”. 

And todays crisis has shone a stark light on existing vulnerabilities and inequalities.  

“We need to foster transformative resilience by choosing policies that tackles high and rising inequality…[and] policies that empower people and communities to become more resilient and offer multiple opportunities for decent work and social and economic transformation”, the ECOSOC President stated. 

Under the premise that today’s digital divide could become “the new face of the development divide”, he underscored the “urgent need” to invest in infrastructure that connects people and strengthens international cooperation “to build a digitalized global economy” guided by regulation and fair competition. 

‘Act with urgency’ 

Meanwhile, General Assembly President Volkan Bozkir said that the world faces the “largest setback in socio-economic development since the Second World War”, and that decades of gains and untold resources, risk being wiped away “if we do not act”. 

“This is unacceptable”, he spelled out, encouraging the members to act with urgency to drive a “people-centered” recovery to mitigate and overcome the negative impacts of COVID-19, particularly on disadvantaged and vulnerable populations.  

However remote or disadvantaged, he stressed that all people must be reached, and that the needs of those hit hardest hit be reflected in recovery planning.   

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Visionary action 

As countries face the social and economic fallouts of the pandemic, the Assembly President called for visionary action, solidarity, multilateral cooperation and “above all else”, transformation.  

“The challenges we face today – from COVID-19 to climate to inequality – all go hand-in-hand”, he observed, saying that “our efforts must be equally as reinforcing if we are to overcome them”.   

Noting that it would not be easy, Mr. Bozkir pinpointed that a new social contract must be drawn up to address root causes of inequality and vulnerability, prioritize equal opportunities and close gaps across the Sustainable Development Goals (SDGs).      

“Now is not the time for hesitancy”, he concluded. 

Digital transformation 

Commission Chair Maria del Carmen Squeff, said that this session is a special one because it follows up on the objectives of the Copenhagen Declaration and Programme of Action, to fight poverty, achieve full employment and promote social inclusion – all within the challenges posed by the pandemic.  

Social welfare depends on a digital transformation, flagged Ms. Squeff, adding that in today’s world, digital inclusion is imperative in leaving no one behind. 

“We must promote equality, with inclusive digital transformation processes”, she said, adding that the way out of the pandemic is by creating in solidarity, “fairer, egalitarian, diverse and inclusive societies”. 

Harness 4th Industrial Revolution 

On behalf of civil society, Maria Fornella-Oehninger and Monica Jahangir-Chowdhury, co-chairs of the non-governmental Committee on Social Development, said that digital technology has “shrunk the planet, galvanized voices for social change and transformed the way we live forever”.  

They urged the UN to utilize the “transformational power of the Fourth Industrial Revolution” to build better societies guided by the values of justice, equity, security, and transparency.  

“Let us join forces and harness the immense potential of digital technology for the benefit of all, accelerating the global transition to a sustainable development based on inclusion, respect for human rights and human dignity”, the cochairs said.

©UNICEF/Srikanth Kolari
A 15-year-old girl in India carries water (right) as she is forced to miss school because she lacks the technology attend online classes.

First Person: Digging for victory in the Philippines

Louise Mabulo has been recognized as a prodigy of the culinary world since the age of 12, when she appeared on the Filipino version of the TV show Junior Masterchef. Since then, she has won several awards for her cooking, and has become a world-renowned social activist. 

Ms. Mabulo, a 2019 UN Environment Programme (UNEP) Young Champion of the Earth, is the founder of The Cacao Project, which works to improve the livelihoods of Filipino farmers in the Bicol Region, by reviving barren lands through tree planting, creating economic forests and nurseries, and promoting fair trade and reforestation.

“As a chef, I am frequently in contact with farmers. These discussions gave me a good insight into the problems with the food system in the Philippines: where there are gaps, and where there is over-supply. 

This prompted me to start farm-to-table dinners, using only local ingredients. When Bicol region was hit hard by a typhoon, I began a relief effort for farmers, but I realised that this could only have a superficial effect on their lives, so I oriented my career towards agriculture.

IOM
The Philippines is prone to frequent typhoons (file).

A vulnerable region

The Philippines is one of the countries that is most severely affected by climate change: since September of last year, we have been struck by three typhoons and, in Bicol, where I’m from, 400 homes were destroyed. 

Whilst Bicol is a lush and green region, far from urban centres, there is still a lot of degradation. When typhoons destroy crops and farms, people with no other option will do what they can to create income, including cutting down trees.

The Cacao Project’s goal is to ensure that farmers don’t have to resort to these kinds of measures, and to provide them with the resources they need for sustainable success, even in the face of extreme weather events.

For example, we explain that leaves shaken from trees from storms create a lot of mulch, which providers great compost. Using trees for mulch is more restorative and sustainable than removing the trees, and it improves the soil. The methods we teach them are helping them to save money, and improve their harvests.

UNEP
Farmers working with The Cacao Project, founded by 2019 Champion of the Earth Louise Mabulo (left), learn sustainable techniques to help them cope with climate change.

Proud to be farmers

Our approach is completely in line with the UN’s recommended approach to farming: more nature-friendly, more supportive of biodiversity, limiting the use of pesticides and herbicides, and cultivating a wider range of indigenous crops.

Before the project began, a small range of crops were being cultivated: mainly corn, coconut and rice. Once we started working with the farmers, they began to introduce more crops that are well suited to the local conditions, such as bell peppers, okra and, of course, cacao.

Many of the farmers involved in The Cacao Project have seen significant improvements to their lives. They’re learning modern techniques, and have been able to put their children through school. Women are being empowered: we have women trainers and supervisors, and the quality of their work is being recognized.

Younger people are also becoming more interested in farming, which has not been valued as a profession in the past: it was associated with poverty and failure. Today they’re turning their backyards into gardens, and even planting trees in land they’ve inherited from their parents. They’re proud to be farmers, which they see as being part of the solution to climate change.

UNEP
Farmers working with The Cacao Project, founded by 2019 Champion of the Earth Louise Mabulo, learn sustainable techniques to help them cope with climate change.

Food and biodiversity

  • Biodiversity is crucial to human and planetary health; the earth’s natural systems regulate the environment, and maintain a habitable planet. However, the global food system has been harming the environment over the past 50 years, and biodiversity is declining faster than at any time in human history.
  • Protecting biodiversity is part of the UN’s 2030 Agenda for Sustainable Development. Sustainable Development Goal 15 calls for the reversal of land degradation, and a halt to biodiversity loss. 
  • On Wednesday 3 February, UNEP, Chatham House and Compassion in World Farming launched, in partnership, a new Chatham House report, “Food System Impacts on Biodiversity Loss”.
  • The report calls for farming to take place in a more nature-friendly, biodiversity-supporting way, limiting the use of inputs and replacing monoculture with polyculture farming practices.
  • Louise Mabuto took part in a panel discussion as part of the launch, in which she explained how The Cacao Project is helping farmers to maintain and restore local ecosystems, and adapt to the effects of climate change.

Pandemic triggers ‘widespread upheaval’ in global fisheries and aquaculture

“Production has been disrupted, supply chains have been interrupted and consumer spending restricted by various lockdowns”, said Maria Helena Semedo, Deputy Director-General of the Food and Agriculture Organization (FAO). 

And as containment restraints continue to affect supply and demand, further interference may impact the sector throughout the year, according to FAO’s The impact of COVID-19 on fisheries and aquaculture food systems report. 

The brunt of lockdown  

While containment restrictions are expected to have pushed fish supply, consumption and trade revenues for 2020 into decline, the report noted that global aquaculture production – the cultivation of all organisms including plants, and other saltwater or freshwater organisms – may also have recorded its first drop in years. 

“Containment measures have provoked far-reaching changes, many of which are likely to persist in the long term”, said Ms. Semedo. 

The report stressed every stage of the fisheries and aquaculture supply chain is susceptible to being disrupted or stopped by these restrictions. 

The Fish Price Index is down for most traded species and restaurant and hotel closures in many countries have prompted falling demand for fresh fish.  

“The impact has been significant in developing countries, especially those with large informal sectors, where small-scale and artisanal workers and communities depend on fisheries for their food security, livelihoods”, the deputy FAO chief said.  

“They have borne the brunt of restrictions”. 

The FAO report indicated that unsold aquaculture products would increase live fish stocks, creating higher costs for feeding and more fish mortalities.  

Frozen over fresh 

And COVID19-related restrictions on crews along with market conditions have reduced fishing, leaving a slight decline in global wild catches last year. 

The coronavirus has also caused consumer preferences to shift as households stock up on non-perishable foods, replacing the demand for fresh fish with a preference for packaged and frozen products. 

Meanwhile, before the pandemic, the sector was trending upwards, with fish consumption growing significantly over the last decade to an average of more than 20 kilos per person. 

Moving forward 

While FAO pressed for disruptive border restriction measures on food production to be minimized for food security, the report called for sectoral and regional organizations to manage fisheries and aquaculture together during the pandemic. 

COVID-19’s impact on women – already vulnerable as food producers, processors and vendors – should also be considered when government’s decide on support levels.  

Amidst so much uncertainty, FAO reminded that the 34th session of the Committee on Fisheries (COFI 34), taking place this week, is celebrating the 25th Anniversary of the Code of Conduct for Responsible Fisheries – the landmark instrument endorsed by FAO member States that has been guiding efforts towards sustainable fisheries and aquaculture around the world.

Fair Finance: The women entrepreneurs lifting communities out of poverty

Goodwill Ambassador Sonia Gardner. UNCDF

Moroccan-born Ms. Gardner, is one of the most prominent senior women in the financial sector, and has been an industry leader for over two decades, as president of a multi-billion dollar New York-based global alternative investment fund. She has pledged to use her new role as the first-ever UNCDF Goodwill Ambassador to promote opportunities and resources for women business owners, and improve living standards for underserved communities. 

UN News: Why is it important to help more women gain access to finance?  

Sonia Gardner:  First, finance can play an important role in facilitating economic growth in the world’s poorest countries and that, in turn, can improve the investment climate and living standards for underserved women in those communities.

Separately, women have traditionally faced many obstacles in building their careers in the finance industry. For example, in some areas of finance, the percentage of women in C-Suites (executive-level managers) is less than 10 per cent, and gender inequality tends to become more pronounced as one moves up the career ladder, particularly as many women drop out in middle management for a variety of reasons.  

These are the types of challenges I hope to help address as Goodwill Ambassador for UNCDF.  I am truly honoured and humbled to serve in this role.

UN News:  What are some of the challenges faced by women?

Sonia Gardner: I think one of the biggest challenges faced by women continues to be unequal treatment in the workplace.  Since I entered the workforce 30 years ago, there has been improvement, but there still is much work to be done to eliminate systemic inequality.  

In 1986, I entered the world of finance and built a business working closely with my brother.  In part because of that, I didn’t face the same challenges that many women in our industry have confronted as they have worked their way up the corporate ladder, or hit the glass ceiling.  I faced different challenges; at the top of the list, was the experience of being the only senior woman in the room on too many occasions over the last 30 years.  

Much has been written about how to solve the problem of systemic inequality, and although some progress has been made over the years, there is still much work that needs to be done to increase the number of senior women in finance.  As you can imagine, gender inequality in the Least Developed Countries (LDCs) is a far greater problem.

UNCDF
The United Nations Capital Development Fund (UNCDF) is supporting women’s economic empowerment in the world’s 47 Least Developed Countries (LDCs).

UN News: As Goodwill Ambassador, who are you advocating for?

Sonia Gardner: My area of focus is on gender equality in the 47 least developed countries working to give women access to economic resources.  These women in the LDCs need capital to start and grow businesses and provide a path to lift their families out of poverty.

I absolutely believe that most men and women see that change is necessary. Women in the LDCs are particularly underserved and vulnerable.

UN News: Why are you so passionate about this issue?

Sonia Gardner: This issue is critical to me because the inequities are so stark and so few women experience financial inclusion.  

My personal background has helped shape my perspective.  I was born in Morocco and, at age four, I immigrated to the United States with my family. I grew up in a small two-bedroom apartment and shared a room with my brother and sister for many years.  

My parents came here with almost nothing, and their primary goal was for us to have a good education.  They made incredible sacrifices and we all went to college and law school on scholarships and loans.  I’m grateful every day for the success I have had over the years and I believe giving back is central to anyone’s success. I have truly lived the American Dream.

Despite my modest upbringing, I was afforded numerous opportunities in my life that helped me to achieve success. I want to give my time and use my voice to help improve the lives of women in the LDCs because that’s one of the areas where I see the greatest needs, at this time.  

UNCDF
The United Nations Capital Development Fund (UNCDF) is supporting women’s economic empowerment in the world’s 47 Least Developed Countries (LDCs).

UN News: What will you do to bring about change and make it easier for women to access finance?

Sonia Gardner:  Last year, I was able to meet Yvonne Aki-Sawyerr, the incredible mayor of Freetown, Sierra Leone.  Since meeting the Mayor at an event during the UN General Assembly, I have helped her build an early learning centre at the Congo Water Market in Freetown, for 40 preschool children ages one to five.  A second centre for an additional 40 children will be built later this year.   

These centres will allow women working at the market to have their children get a head start on a quality education.    

I look forward to broadening this type of support, for UNCDF to make finance work for the poor and help to achieve the SDGs. 

In much of the world, women are the providers. They, like the market women in Sierra Leone, are earning money and supporting their families every day.  It’s very hard for them to get any sort of financing or backing or even childcare. I’m planning my first trip to Sierra Leone, which will hopefully be in the fall, to visit the childcare centres and see first-hand the positive change for these market women and their children. 

UN News: What do your peers in this male-dominated industry make of your appointment as Goodwill Ambassador?  

Sonia Gardner: My peers are very excited that I’ve taken on this role, and have been very supportive.  They agree that we need to improve the pipeline and build a system that supports women, to eliminate the systemic inequality women have traditionally faced.  

Studies have found that, because mentorship for young women is so important, both senior women and men need to participate.  I saw this in my work as the Chair of 100 Women in Finance, which does important work with its NextGen programme. My hope is to create a network of my peers, men and women alike, who will mentor women in the Least Developed Countries and help find solutions to lift them out of poverty.

The UNCDF and a fairer future

  • The UN Capital Development Fund (UNCDF) makes public and private finance work for the poor in the world’s 47 least developed countries.
  • By strengthening how finance works for poor people, UNCDF contributes to Sustainable Development Goal (SDG) 1 on eradicating poverty, and SDG 17 on developing partnerships that advance the UN’s goal of a fairer future for all.
  • Ms. Gardner’s designation as the UNCDF’s first-ever Goodwill Ambassador is a recognition of her achievements in both finance, and philanthropy and her commitment to the cause of gender equality.

Fair Finance: How can the global inequality gap be narrowed?

UN Special Envoy Hiro Mizuno. Hiro Mizuno

Before his appointment as Special Envoy, on 30 December 2020, Mr. Mizuno, of Japan, served as Chief Investment Officer of the Japan Government Pension Investment Fund (GPIF). He serves on the board of the Principles for Responsible Investment Association (PRI, an UN-backed body that aims to create sustainable markets that contribute to a more prosperous world for all), and has taken part in UN discussions on promoting the Sustainable Development Goals.

UN NEWS: How did you come to be involved with the UN and sustainable investment?

Hiro Mizuno: My journey started with a charity dinner around seven years ago, when I found myself sat next to former UN Secretary-General Kofi Annan. I was a partner at a private equity firm at the time, and Mr. Annan asked me why Japanese investors were not interested in ESG (Environmental, Social and Governance investing, otherwise known as sustainable investing). I couldn’t answer, because this was the first time that I’d heard of ESG! When he explained, my first reaction was that, in fact, this sounded very much like a natural fit with Japanese corporate philosophy.

I’ve been working in the financial sector throughout my professional life. However, up until I became the Chief Investment Officer of the Japanese Government Pension Investment Fund (GPIF), I had always struggled with the concept at the heart of the investment industry; that, to win, you have to beat the market by outsmarting everyone else. I questioned whether the industry was adding any added value to society.

Then, when I joined the GPIF, which holds more than $100 trillion in assets, I realised that we effectively were the market. This is when I came up with the idea of universal ownership: as universal owners, it made more sense for us to contribute, by making the system better for everyone.

We soon started to get questions from the big portfolio managers, asking us what we were trying to achieve, and how they should respond. We started to use the Sustainable Development Goals (SDGs) as a convenient way to explain our strategy to corporate executives.

CIFOR/Tri Saputro
A farmer harvests rice in Bantaeng, Indonesia.

UN News: How can the financial sector address the growing gap between rich and poor?

Hiro Mizuno: The famous French economist Thomas Piketty, writes that the returns on investment outperform the economic growth rate. This means that those who hold financial assets become wealthier than the general workforce, who earn money from a salary. His conclusion was that, as a result, the gap between rich and poor continues to widen.

When I was at the Japanese Government Pension Investment Fund, my aim was to reduce that gap. We handled huge financial assets and, by growing the fund, we could use pensions to allow ordinary people to benefit from the returns.

As CIO, inequality was always on my mind, all kinds of inequality, including between men and women, and between the Global North and Global South. If you look at the 17 SDGs, you can classify them as being about either sustainability, or inclusiveness.

Achieving inclusiveness is, of course, a way of reducing inequality, but so is sustainability: if we fail to deal with the climate crisis, we will be creating a sustainability gap between past and future generations, one that is unfair on those who will be left to deal with a world that is in a worse state than at present.

© UNICEF/Dhiraj Singh
A woman combs her granddaughter’s hair outside their home in Maharashtra, India.

UN News: Should the financial system be completely overhauled?

Hiro Mizuno: One of the problems with the financial system is that it’s largely based on an investment theory that is at least thirty years old. Redesigning a system takes a long time. It may, eventually, work much better, but expending the effort may mean doing nothing else for too long.

We only have 10 years to achieve the UN Sustainable Development Goals, and that is not enough time to change the whole system. What we can do is try to address technical hurdles. If we do that, we’ll get less pushback from investment professionals.

It’s true that many of those who work in finance feel constrained by the system, but things are changing: 10 years ago, investment professionals felt awkward about putting the word “sustainable” in their portfolio, but now that is seen as being acceptable.

What we need, I think, is much more innovation. There are so many technically smart people in this industry and, if we can address technical issues, there will be a domino effect that will lead to real, systemic change. 

UN News: What can you achieve as Special Envoy?

Hiro Mizuno: I’ve only been in this role for a short time, and I’m still trying to figure out what leverage I will have, but what the UN certainly has, is the power to bring decision-makers together to solve some of the world’s greatest problems. I’m very excited to work with the different parts of the UN System, as well as with the Secretary-General, to see how we can achieve change.

My goal is to use the financial sector to speed up the transition to a more equitable world. At a more practical level, I want to make investments more compatible with the Sustainable Development Goals. 

As we head towards to UN climate conference in November (COP26, due to be held in Glasgow in November), I want to see us create momentum, and get businesses aligned between themselves, as well as with our social and environmental goals. One thing I’ve learned throughout my career is that, when everyone is aligned, everything accelerates.
 

FROM THE FIELD: COVID crisis creates new wave of self-reliance for Tonga

The Tonga Rural Innovation Project © IFAD/ Todd M. Henry

COVID-related travel restrictions, and increasing prices of imports, have created new challenges, on top of destructive weather events, such as tropical cyclones which can sweep over the archipelago, destroying crops and infrastructure.

UN-supported projects are encouraging the inhabitants of Tonga’s 36 inhabited islands to return to rural areas and grow food, reducing their dependence on imported products, and boost the local economy.

Initiatives include training on how to develop backyard plots, healthy eating tips, and outdoor classes where farmers learn about new plant varieties, and improved cultivation practices.

You can find out more about the International Fund for Agricultural Development’s (IFAD) work in Tonga, here.

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