The UN Secretary General’s Task Force on Digital Financing of the SDGs (DFTF) established the Dialogue on Global Digital Finance Governance to explore the nexus of BigFintechs and sustainable development. Through its findings, the Dialogue aims to catalyze governance innovations that take greater account of the SDG impacts of BigFintechs and are more inclusive of the voices of developing nations.
The Dialogue on Global Digital Finance Governance is hosted by the Swiss and Kenyan Governments and stewarded jointly by the United Nations Development Programme (UNDP) and United Nations Capital Development Fund (UNCDF).
Understanding the impacts of BigFintechs on sustainable development
BigFintechs have complex, technology-driven, cross-sector business models, with embedded finance, making the task of understanding their impacts challenging. Current reporting and monitoring standards are unable to capture BigFintechs’ SDG impacts across their extended ecosystems and value chains, many of which operate in developing economies.
Greater international cooperation and corporate governance have critical roles to play in balancing BigFintechs’ sustainability-related challenges with their commercial interests.
Guidance for effective cooperation efforts:
- Ensure the foundational objectives of financial stability and integrity, consumer and investor protection, market integrity;
- Support core developmental objectives, seeking to balance potential risks of BigFintechs with the potential for enhancing SDG outcomes;
- Advance responsibility of BigFintechs themselves, with incentives and frameworks to encourage the pursuit of beneficial SDG outcomes;
- Develop appropriate oversight and enforcement; and
- Instill a commitment to sustainable development within BigFintechs and promote operationalization of that commitment.
The Dialogue has produced a series of papers exploring new, complementary perspectives on the nexus of BigFintechs, sustainable development and governance.
The papers look at the issues raised by BigFintech activity in developing economies, including digital governance issues, tax base erosion, crowding out of local SMEs, worsening working conditions for digital workers, negative environmental impacts, widening inequalities, impacts on macroeconomic and monetary policies, and many more. They also discuss the many positive impacts that BigFintechs can have in areas such as inclusion, resilience and livelihood earning. We then explore some of the corporate governance innovations that have been advanced in trying to mitigate some of these impacts as well as current approaches to BigFintechs regulation and governance, and the extent to which the SDGs are considered.
Findings are organized under three thematic areas - Impacts on sustainable development, corporate governance innovations and, international governance, policymaking and the SDGs.
The Dialogue on Global Digital Finance Governance has developed a set of guiding principles and recommendation upon which policy makers, regulators and BigFintechs can build BigFintech governance frameworks at all levels.