BUS604: Innovation and Sustainability

Just as governments need businesses to help achieve the Global Goals, the reverse is also true. Governments can help businesses pursue these shared goals firstly by creating an environment that enables private sector growth. The main elements are good and accountable governance, the rule of law, effective contract enforcement and legal systems, and functioning customs regimes. And just as all businesses need to pay their tax, governments' spending must be transparent and free from corruption. If it isn't, confidence in tax systems will wane and the social contract may unravel. 

In addition, achieving the Global Goals requires three specific kinds of government policy, as noted in previous sections, namely policies to:

• Ensure that prices for goods and services reflect social and environmental externalities, rather than policies that distort taxes or offer perverse subsidies;
• Align financial regulation with the Global Goals, in particular to incentivise private sector infrastructure investment. In this regard, the Basel III and Solvency II regimes should be revisited; and
• Support well-funded public education systems, active labor market policies, and adequate, high quality social protection.

Finally, governments can take on a stronger role in financing infrastructure projects. As Section 4 discussed, infrastructure is critical to achieving the Global Goals and stimulating private sector growth. More private sector finance for infrastructure could be mobilized through blended finance if governments created the right conditions. For instance, governments can pursue options, most importantly greater policy predictability, to reduce risks for private finance. They can also expand the resources of the multilateral development banks in which they are shareholders, as well as ask them to put more into infrastructure.