Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
INTERVIEW Why is global wealth not going where it's needed most?
Marcos Athias Neto, assistant secretary-general of the United Nations and assistant administrator of the United Nations Development Programme (UNDP), speaks during an interview with The Korea Times at UNDP Seoul Policy Centre, Monday. Korea Times photo by Choi Won-suk
By Lee Yeon-woo
'Achievement of development goal is not going to happen without private sector': UN assistant secretary-general
In 2015, former U.N. Secretary-General Bank Ki-moon said, "We are the first generation that can put an end to poverty, and we are the last generation that can put an end to climate change."
Achieving substantial improvements in those areas requires a considerable investment of time and resources. However, the question remains: Is an increase in global wealth indispensable to effectively address those issues?
In fact, the Sustainable Development Goals (SDGs) can be achieved with just 1 percent of the existing global wealth, according to Assistant Secretary-General of the United Nations Marcos Athias Neto.
However, the crux of the issue lies in the misallocation of global wealth, as it fails to reach the areas where it is most urgently required.
Neto believes that the reluctance of private financial institutions to invest in sectors deemed "risky" is the underlying reason for this discrepancy.
"There's definitely an improvement. We see a greater flow of resources toward addressing the issue. However, a significant portion of wealth remains in the hands of the private sector, which makes decisions based on risk-adjusted returns. They often perceive risks, for instance, in sub-Saharan Africa, or in Latin America, as too high, avoiding investments," Neto said in an exclusive interview with The Korea Times during his recent visit to Korea.
"Sometimes these risks are real. However, at other times, the players calculating the risk may not have an accurate sense of how grave the real risk is. These are perceptions of risk. That is a core reason the money does not flow [where it's most needed]," he said.
Marcos Athias Neto, assistant secretary-general of the United Nations and assistant administrator of the United Nations Development Programme (UNDP), speaks during an interview with The Korea Times at UNDP Seoul Policy Centre, Monday. Korea Times photo by Choi Won-suk
What is encouraging is that the private sector is likely to view any agenda as an incentive if it perceives lower risks. Therefore, it is crucial to create enabling environments, such as policies and financial de-risking measures, that make the private sector feel comfortable allocating resources to developing countries and sustainability issues, according to Neto.
He believes the private sector's involvement is crucial, asserting that "the achievement of global development goals is not going to happen without them."
Neto explained that the United Nations Development Programme (UNDP) endeavors to mitigate risks by conducting comprehensive analyses of global agendas. Furthermore, it collaborates with international financial institutions like the World Bank, which can furnish guarantees, facilitating the flow of private capital within the framework of risk-adjusted returns. Additionally, the UNDP assists developing countries in structuring financial instruments, such as green bonds, to further these objectives.
Neto is also the assistant administrator and director of bureau for policy and program support at the UNDP. He visited Korea on Monday to meet partners including UNDP Seoul Policy Centre, the Ministry of Foreign Affairs and the Green Climate Fund.
"Korea is a strong voice within the G20 for its strong commitment to green transition and its ambitious plans. I believe there is an opportunity for Korea, as it undergoes its domestic transition, to not only apply its learnings abroad but also export the very instruments it has utilized domestically, such as financing mechanisms or technology," Neto said. "I believe that's the opportunity for Korea to leverage its international presence in G20."