About the Task Force The UN Secretary General established the Task Force on Digital Financing of the Sustainable Development Goals (SDGs) as part of his broader Roadmap for Financing the 2030 Agenda for Sustainable Development: 2019-2021. The Task Forces mandate is to recommend and catalyse ways to harness digitalization in accelerating financing of the SDGs. The Task Forces mandate, work and report are complementary to, and build on The Age of Digital Interdependence, that summarizes the findings and recommendations of the UN Secretary Generals High- Level Panel on Digital Cooperation, and the associated Roadmap on Digital Cooperation. The Task Force is co-Chaired by Achim Steiner and Maria Ramos. Its membership is Maiava Atalina Emma Ainuu-Enari, Henrietta H. Fore, Mats Granryd, Piyush Gupta, Natalie Jabangwe, Eric Jing, Bradley Katsuyama, Pooma Kimis, Liu Zhenmin, Phumzile Mlambo-Ngcuka, Ambareen Musa, Patrick Njoroge, Ceyla Pazarbasioglu, Richard Samans, Aurelie Adam Soule Zoumarou. Members have been supported by their Sherpas, including Matthew Blake, Cyriaque Edon, Alix Jagueneau, Gerald Lam, Mikkel Larsen, Laurence Latimer, Lanna Lome-Ieremia, Helene Molinier, Matu Mugo, Mack Ramachandran, Shari Spiegel, Mahesh Uttamchandani, Barry Wentworth, Meng Yan and Simon Zadek. About the Report Peoples Money: Harnessing Digitalization to Finance a Sustainable Future is the Task Forces final report. It summarizes the findings and recommendations developed and agreed by the Task Force since its inception in November 2018. It is based on an extensive engagement with stakeholders and research. It builds on the Task Forces progress report, Harnessing Digitalization in Financing the Sustainable Development Goals, released on the occasion of the UN General Assembly in September 2019. The report has been prepared for the Task Force by its Secretariat, including the Sherpa to the co-Chairs, Simon Zadek, and Vera Bersudskaya, Duygu Celik, Maya Forstater, Mimo He, Aiaze Mitha, and Arti Singh. Acknowledgements The Task Force has drawn on research and extensive engagement with the financial community, policy-makers and regulators and experts and civil society groups. Thanks to the United Nations Development Programme (UNDP), led by the co-Chair, Achim Steiner, the Sherpa to the co-Chairs, Simon Zadek, and Michele Candotti, Christina Carlson, Annette Edra, Mamaye Gebretsadik, Joe Hooper, Sharon Kinsley, Marcos Neto, Michiko Okumura, and Robert Opp. Also thanks to the United Nations Capital Development Fund (UNCDF), led by Judith Karl and Henri Dommel and including Amil Aneja, Deena Austin, Tillman Bruett, Ralph Chow, Anne Folan, Imelda Panguito and interns Chen Bi, Yi Chen, Yuxin Huang. Special thanks also to the Task Force partners, including Marianne Haahr and Katherine Foster of Green Digital Finance Alliance; David Craig, Sherry Madera, and Julia Walker of Refinitiv; and Louise C. James, Palak Kapoor, Sebastian Rodriguez of Accenture Development Partnerships. Thanks to the following individuals who participated in offsites, working groups and contributed to reviews of the various iterations of the final report: Azeema Adam, Timothy Adams, Fiona Bayat- Renoux, Greta Bull, Doreen Bogdan-Martin, Brad Carr, Anir Chowdhury, Benot Cur, Matthew Davie, Eric Duflos, Frank Elderson, Belinda Exelby, Ann Florini, Conan French, Katherine Foster, Jon Frost, Matthew Gamser, Sonja Gibbs, Amandeep Gill, Alfred Hannig, Chia Hock Lai, Marc Hollanders, Fabrizio Hochschild, Samira Khan, Lise Kingo, Alexia Latortue, Peter Lovelock, Henry Ma, Jeremy McDaniels, Ma Jun, Alfonso Garcia Mora, Sophie Pilgrim, Dragan Radic, David Symington, Jael Tan, Julia Walker, Daniele Violetti, Andrew Wilson, Louise Wilson and Xiaochen Zhang. Thanks also to Douglas Arner, Sofie Blakstad, Liesbeth Casier, Ralph Chami, Peter Chowla, Pedro Conceio, Fadi Chehad, David Gerbrands, Norbert Gorissen, Sunita Grote, Dakota Gruener, Juan Pablo Guerrero, Rajeev Gupta, Mark de la Iglesia, Johanna Jochim, Cheryl Joseph, Peter Knaack, Christina Lomazzo, Cornis van der Lugt, Yolanda Jinxin Ma, Sabine Mensah, Lorena Rivero del Paso, Oshani Perera, Paolo de Renzio, Bas Rter, Mateo Salomon, Jaspreet Singh, Martin Spolc, Gerardo Ua, Tidhar Wald, Oliver Waissbein. Thanks to those who contributed to the Call for Contributions and the formally constituted convenings in Amsterdam, Beijing, Berlin, Brussels, Davos, Geneva, Kuala Lumpur, London, Milan, Mumbai, Nairobi, New Delhi, New York, Paris, San Francisco, Singapore, and Toronto. Also particular thanks to the Rockefeller Center in Bellagio, Ant Financial, World Bank, and World Economic Forum who organized meetings and retreats that fed into the report. We thank Germany, Italy and Switzerland for their generous funding and support to the Task Force. Further Information Information about the Task Force and downloads of this report, including action briefings for stakeholders, a summary version, an extended bibliography and related reports can be accessed at digitalfinancingtaskforce. Task Force members have participated in a personal capacity and are not expressing endorsements or commitments on behalf of their institutions This work is licensed under BY 4.0 3 CO-CHAIRS MEMBERS Maria Ramos Previously Chief Executive, ABSA Group Ltd Maiava Atalina Emma Ainuu-Enari Governor and Chairperson of the Board, Central Bank of Samoa Henrietta H. Fore Executive Director, UNICEF Mats Granryd Director General, GSMA THE TASK FORCE ON DIGITAL FINANCING OF THE SUSTAINABLE DEVELOPMENT GOALS Achim Steiner Administrator, UNDP T ask F or ce Members 4 Piyush Gupta CEO, DBS Bank Bradley Katsuyama CEO and co-founder, IEX Phumzile Mlambo-Ngcuka Richard Samans Natalie Jabangwe CEO, EcoCash Ambareen Musa Founder and CEO, Souqalmal Liu Zhenmin Aurelie Adam Soule Patrick Njoroge Governor, Central Bank of Kenya Eric Jing Executive Chairman, Ant Group Pooma Kimis Director, Autonomous Research Ceyla Pazarbasioglu VP for Equitable Growth, Finance and Institutions, World Bank Group Minister of Digital Economy and Communications, Government of Benin Under-Secretary-General, UN DESA UN Under-Secretary-General and Executive Director, UN Women Managing Director and Member Managing Board, World Economic Forum T ask F or ce Members 5 C o-Chairs L et ter We must think to the future, even amidst our efforts to deal with the tragedy, turmoil, and uncertainties thrust upon us during the current crisis. Digital has proved to be a keystone in our handling of the crisis and will certainly emerge as a more important part of our collective futures. With foresight, and fortuitously given todays context, the UN Secretary General mandated a task force to recommend how best to harness the forces of digitalization in accelerating financing of the Sustainable Development Goals (SDGs). We are honoured to have been invited to co-Chair this task force, given both the importance of its mandate, and the exceptional leaders drawn to its ambitious goals from governments and regulators, financial, technology and international development communities. The nexus between digitalization, finance and the SDGs is largely a new frontier of investigation and action. Fulfilling our mandate has therefore required us to catalyse a knowledge ecosystem and a community of practice, as much as making recommendations. Core to the conclusions of the task force is that digitalization amplifies the potential for the financial system to better serve the interests of people, whose money it manages, and whose collective interest is expressed by the SDGs. Our Action Agenda, we believe, offers an ambitious yet resolutely practical pathway for realising this potential, and closing the gap in financing the transition to an inclusive, sustainable development. In conclusion, we would like to thank the UN Secretary General for the opportunity to play a role in advancing his broader strategy for financing the SDGs, and to thank the members of the Task Force for their extensive contributions, insights and conclusions reflected in this final report. LETTER FROM THE CO-CHAIRS Achim Steiner Maria Ramos 6 6 CONTENTS Contents EXECUTIVE SUMMARY 8 SECTION 1: INTRODUCTION 1 An Historic Opportunity 10 2 The Task Force and this Report 13 SECTION 2: DIGITAL FINANCING OF THE SDGS 3 Digitalization and Finance 17 3.1 Era of Digitalization 17 3.2 Fundamentals of Digital Financing 19 3.3 Digital Financing Today 21 4 Digitalization, Financing and Sustainable Development 25 4.1 The Financing Gap 25 4.2 Todays Digital Financing of the SDGs 26 4.3 Digital Financing for Every SDGs 32 5 Citizens, Digitalization and Financing the SDGs 34 6 Challenging Digital Financing Futures 37 6.1 Uncertain Futures 37 6.2 Barriers and Risks 38 SECTION 3: ACTION AGENDA 7 Call to Action 45 7.1 Shaping Digital Financing Futures 45 7.2 Action Agenda 46 8 Catalytic Opportunities 50 8.1 Channel Domestic Savings into Development Financing 52 8.2 Enhance Financing for Small and Medium-Sized Businesses 54 8.3 Create Virtuous Trust Cycles in Public Financing 55 8.4 Embed SDG Data into Financial and Capital Markets 56 8.5 Encourage Sustainable Consumption 58 9 Building Sustainable Digital Financing Ecosystems 59 9.1 People-Centric Digital Infrastructure, ID and Data 60 9.2 Institutions for Integrating SDGs into Digital Financing 61 9.3 Developing Capability 63 10 Inclusive International Governance 68 11 Next Steps 75 11.1 Implementing the Action Agenda 75 12 Epilogue 80 SUPPLEMENTARY INFORMATION Acronyms 83 Glossary 85 Endnotes 87 EXHIBITS 1. Who is the Task Force? 13 2. The Task Forces Mandate, Goals and Core Questions 14 3. Core Definitions 18 4. Citizens and Digital Financing of the SDGs 20 5. Digital Financing services to substitute for physical goods, small and medium-sized enterprises to access world markets, and materials to be more effectively tracked in order to be reused and recycled. Health and education services can be digitalized, with reduced costs and with distance from major urban centres becoming less of a barrier to access. Infrastructure becomes smarter, from buildings that can use less energy and clean and recycle water, to transport systems that are more flexible and less polluting. Digitalization enables physical assets to be shared and more intensively used, such as cars, roads and homes but also clothes, equipment and even food. Digital financing is broadly defined as financial services delivered through digital processes and infrastructure. Digitalization is the integration of digital technologies into everyday life, changing the way that we interact and live. Digitalization of finance comprises the systemic changes to the financial system, aided by technology including changes in business models, products and services. Digitization is the shift from paper to digital format and the shift from manual to automated processes. Financing includes processes of buying and selling, taxation, procurement, contracting, saving, credit, investment, and insurance, through both public institutions and private intermediaries. NB: A full glossary is included on page 85. Digital financing of the SDGs Exhibit 3: Core Definitions 19 Digital financing of the SDGs Innovation in financial products, enterprises and markets. Digitalization enables new business models, such as cryptocurrencies and crypto-assets, peer-to-peer lending, crowdfunding platforms, online marketplaces and aggregators, smart-devices linked or index-based insurance. 67 These are not just cheaper ways of doing existing things, they offer new ways of bringing together hitherto fractionalized interests in financing decisions such as by local communities, young people, parents and other interest-based groups. These core features are driving the practice of digital financing, and its potential to make a difference. The transformational opportunity from digitalization is to enable evolution from financial inclusion to citizen-centric finance. Citizens care about far more than financial returns, with those wider concerns collectively expressed in the SDGs. 68 Digitalization can help citizens in directing the use of their money more effectively to realize their financial and non-financial goals, by delivering the right information, improved access, greater accountability and smarter financial services. 69 3.2 FUNDAMENTALS OF DIGITAL FINANCING Digital financing is broadly defined as financial services delivered through digital processes and infrastructure. There are three core features of digital financing: Availability of more, cheaper, readily accessible and more trustworthy data. 64 When data is shared, linked and combined across boundaries, and analysed using machine learning and artificial intelligence it enables targeted pricing and risk analysis, which unlocks new insights and possibilities. More and better data enables product-personalization and service innovation. 65 Radical reduction in the cost of financial intermediation. Digitalization, driven by market innovators, sets up a chain reaction of disruption, powered by ever-cheaper and faster computing. Digitalization allows financial value chains to be unbundled into separate components, enabling low- cost, automated customization of everything from payment processors to point of sale machines to billing and invoice management, cashflow and liquidity management, bookkeeping and payroll management, lending, equity, invoice financing and insurance. 66 20 Digital financing of the SDGs Digital public procurement Government payment solutions Open government data Supply chain tracing Carbon footprint tracking Digital payments Sharing economy Mobile wallets Data driven insurance Digital group saving Gamified saving apps Robo advisors Retail green/ blue securities Fractional asset ownership Impact investing platforms Algorithmic leading Rent to own Pay-as- you go Layaway asset lending P2P microlending Debt crowdfunding Digital remittance Crowd funding Direct giving CITIZENS TAX PAYERS BUYERS SAVERS INVESTORS BORROWERSLENDERS GIVERS Greater citizen engagement in financial decision-making can be as individuals, for example consumers, savers and investors, and as pension and insurance policy holders. However, this does not mean that digital finances impact is solely driven by the atomized decisions of 7.5 billion people acting as consumers and individual savers and investors. Rather it concerns all of the myriad ways that people organize collectively, at family, community and city level, through trade unions, religious groups, community and identity groups, and through political processes and oversight. Citizen-centric finance concerns the effective aggregation of influence through these many channels and the way that they can shape and channel financial flows through different intermediaries. Exhibit 4: Citizens and digital financing of the SDGs 21 Digital financing of the SDGs 3.3 DIGITAL FINANCING TODAY Digital infrastructure and digitalization impac