The world is at the half-way point on the road to the Sustainable Development Goals. The UN General Assembly unanimously adopted the 17 goals in September 2015. This “blueprint for peace and prosperity for people and the planet, now and into the future” is meant to become a reality by 2030.

But global macroeconomic volatility, following on from covid-19 and the war in Ukraine, as well as the escalating impacts of climate change, are putting the achievement of the goals in growing jeopardy.

The UN warned in July that the world is on course to miss almost all the SDGs, partly because of the impact of the pandemic. Covid has wreaked havoc on the delivery of basic educational and healthcare services and, alongside rising inflation and the impacts of the war in Ukraine, could push the number of people living in extreme poverty upwards by up to 95 million.

Fundraising fears

The UN Conference on Trade and Development reported that the annual funding gap for the SDGs in developing countries stood at around $2.5 trillion in 2015. That figure has grown to around $4 trillion. Meanwhile, UNCTAD data shows that foreign direct investment in renewable energy in emerging markets has rebounded to exceed pre-pandemic levels. But investment in other sectors – such as infrastructure, water, sanitation, agriculture and health – remains depressed.

“The problems facing society and the environment are too big to ignore, and investors are understanding that more all the time”

Daniel Perroud

Private equity firms operating in emerging markets, many of which have adopted impact objectives tied to the SDGs, must now navigate a difficult landscape. Private capital fundraising in Africa – the continent where development challenges are greatest – declined by 20 percent year-on-year in the first half of 2022, according to the African Private Equity and Venture Capital Association.

Daniel Perroud, global head of business development at BlueOrchard, the impact investing arm of Schroders, describes the slowdown in fundraising across emerging markets as a “major concern” in terms of achieving the SDGs. “Any flight, however temporary, from EM investments will have implications for long-term sustainable development efforts.”

The struggle to raise funds in emerging markets partly reflects the global downturn. But rising interest rates in developed markets make investing in emerging markets relatively less attractive. The depreciation of many EM currencies against the US dollar over the past year further adds to the challenge in persuading investors to back the SDGs in emerging markets.

“Rising interest rates and currency volatility – within the context of a very challenging global macroeconomic and geopolitical backdrop – has had the knock-on effect of increasing private investment volatility and credit spreads, and reducing private capital flows to emerging markets,” says Fabienne Michaux, director of SDG Impact, a UN Development Programme initiative to accelerate private sector investment in the SDGs.


Managers seeking to contribute to the SDGs can find some solace in the fact that development finance institutions remain committed to deploying capital into funds that aim to address social and environmental problems. Capital managed by DFIs has doubled in the last decade, reaching $84 billion in 2022, according to Devex, a global development research platform.

Whether DFIs can achieve their ambition of catalysing non-concessionary capital remains uncertain, but Perroud sees positive signs. “We would continue to expect significant private sector interest in SDG-focused products,” he says. “The problems facing society and the environment are too big to ignore, and investors are understanding that more all the time.

“Looking ahead, we therefore expect investor interest in emerging markets and emerging market PE in particular to pick up again.” Indeed, as Perroud points out, “the situation of most emerging markets – in particular relative to developed markets – does not seem to warrant such a risk aversion, as they have historically always demonstrated faster recoveries”.

Emerging markets remain generally well-positioned to outpace growth rates in developed markets, in spite of the current difficulties. The International Monetary Fund projects that growth in advanced economies will see a decline from 2.4 percent in 2022 to 1.1 percent in 2023. By contrast, it expects ‘emerging market and developing economies’ to see growth remain steady at 3.7 percent in 2023.

Racing to 2030

Marc Stoneham, a partner at Africa-focused PE firm Development Partners International, says he is “pretty bullish” about the overall climate for investing in Africa. “In the context of a very globally challenged 2022, I would say, relatively speaking, the continent has actually been a pretty resilient place to have your money.”

Stoneham insists that experienced managers are capable of finding companies that deliver on the SDGs while achieving impressive financial returns. “The lesson of the last five to 10 years, and certainly of our funds, is that if you back sector leaders with great and nimble management teams, they should be more than capable of outgrowing any inflation differential-led FX impact,” he says.

In the longer term, Stoneham argues that the macroeconomic picture is sufficiently positive to attract greater levels of investment into emerging markets. “We continue to see a lot of strategic investors who operate to a slightly longer-term time horizon, who see past whatever 2022 or 2023 brings us,” he says.

Noting that many African countries are poised to achieve 6-8 percent growth rates, he adds that the continent “is one of the few places in the world where, over the next five-to-10-year cycle, you’re going to get really, really interesting levels of growth”.

Whether investors can see past the current downturn and allocate sufficient volumes of capital to achieving the SDGs will have a decisive outcome on the future trajectory of global development. But, with just seven years to 2030, and with climate change accelerating, time is running out.

“We are fast approaching tipping points,” says Michaux, “which will have far-reaching consequences for us all and for future generations. The way we currently operate, make decisions and allocate capital is part of the problem. When we make that realisation we will also realise we have more than enough capital in the world to solve these issues. What we need is a shift in mindset and the collective commitment to make it happen.”