How to Harness Local Investors in Emerging Markets: The Example of Local Pension Funds

There is a significant gap in financing sustainable development in emerging economies to meet the climate commitments under the Paris Agreement and to fulfill the Sustainable Development Goals (SDGs). The Organization for Economic Co-operation and Development (OECD) estimates that more than US$4 trillion of financing is needed annually. While much of the capital required will come from OECD-country sources, which hold 80% of worldwide financial assets, there is an untapped pool of local investments to be drawn on. This paper offers three practical directions for policymakers in order to make the promise of local investors contributing to sustainable development a reality. While this level of focus will require concerted effort to implement, it increases the opportunity for local investors to play a crucial role in closing the financing gap.