Despite the past two decades of progress, the Asia-Pacific region still faces a USD 1.5 trillion annual gap in financing the Sustainable Development Goals. To address this gap, mobilizing untapped private capital resources is crucial. Incoherent governance frameworks, uneven capital markets’ development and rising geopolitical unpredictability, are increasing transaction costs and reducing financial returns, making SDG-aligned private investments less attractive.
Balancing profitability with impact is a complex challenge, as impact-aligned investment sectors and markets are often seen as high-risk and face persistent issues around governance. This is compounded by the belief that financial and social returns are frequently at odds.
But there are promising examples where this balance is achieved effectively. Investing in women’s equality, as a cause area, for example, has shown potential to add $4.5 trillion to countries in Asia and the Pacific’s annual GDP by 2025—a 12% increase over the business-as-usual trajectory ESCAP’s Catalyzing Women’s Entrepreneurship project is demonstrating impressive returns on women-led entrepreneurship. To bridge the gap between impact and profitability, there is a growing trend to reframe development challenges as business opportunities.
Impact investing has gained momentum in the private sector as a way to close the SDG financing gap. At the 12th Asia-Pacific Forum on Sustainable Development, a session on “Accelerating the SDGs through Impact Investing in Asia-Pacific,” co-organized by ESCAP and AVPN (formerly the Asian Venture Philanthropy Network), showcased profitable yet impactful ventures and investors who have a keen eye on this movement.
From the business perspective, Marc Schmidt of Boston Consulting Group shared the example of Olam’s venture, Jiva, a digital agri-advisory platform connecting smallholder farmers to stakeholders throughout the supply chain. The platform has increased farmers’ market access, productivity and income, while strengthening Olam's supply chain resilience and profitability.
Another example from the investors’ perspective was shared by Antoine Raes of Mirova, an asset management company focusing on sustainable investments. In managing its SME-focused funds in South-East Asia, Mirova adopted end-to-end impact-aligned metrics throughout the investment process. The strategy aligns the key impact and profitability indicators during the definition phase, such that impact metrics are congruent with profitability drivers. This intentional approach shows how fund managers can harmonise impact and financial performance across their portfolio.
Which sectors hold the greatest potential for investment?
Participants at the event noted significant investment potential in climate solutions, healthcare and education. However, they often face challenges in accessing the right financing instruments. By encouraging the private sector to adopt a commercial lens, governments can spur public-private partnerships and unlock private capital for development.
On the other hand, family-owned businesses represent untapped opportunities. Family businesses form the backbone of the region’s economy, with total market capitalization exceeding USD 5.56 trillion. While playing a crucial role in the region’s markets, family-owned companies are also experiencing a generational shift towards greater alignment with the SDGs, suggesting the opportunity of unlocking domestic capital for impact-oriented industries.
What support is needed?
To tap into these opportunities, governments can offer innovative financing mechanisms, policy incentives and capacity-building initiatives to help businesses navigate the complex landscape and align their business interests with the SDGs.
A major hurdle for public-private partnerships is building a strong pipeline of bankable projects. Many government initiatives remain at the ideation stage and fail to attract private investment. Tailored solutions, including needs-based capacity building, are essential especially given the region’s diversity in resources, priorities and governance structures.
Official Development Assistance (ODA) funds are also critical in supporting the project development process, including environmental impact assessments, which can help de-risk initiatives and make them more attractive to private capital.
Bridging the SDG financing gap in the Asia-Pacific region will require bold, collaborative action to unlock private capital while keeping development impact at the core. As challenges grow more complex, the private sector is proving that profitability and purpose can go hand in hand when backed by intentional strategies. Replicating and scaling these successes demands collaboration among governments, investors and development partners to create enabling environments through better governance, innovative financing and targeted capacity-building. By viewing development challenges as market opportunities, we can catalyze sustainable investments that deliver both financial returns and meaningful impact.
