GAR 2015 Main Report

204

Part III - Chapter 10

short-term gains (UNISDR, 2013a

UNISDR. 2013a,Global Assessment Report on Disaster Risk Reduction: From Shared Risk to Shared Value: the Business Case for Disaster Risk Reduction, Geneva, Switzerland: UNISDR.. .

). As such, the manner in which the sector contributes to risk accumulation is part of its very nature.

This conundrum is compounded by the fact that the current measures of success for both private actors and governments are not compatible with goals such as equity and biocapacity. Where short-term profit and return on investment are key performance indicators, the risk generated by high-yielding investments elsewhere in society is ignored or discounted. If the main metric for success is GDP growth, questions of social equity or the growing gap between the ecological footprint and biocapacity recede into the background. Instead, this concern for economic growth often skews priorities, shifting government attention from serving its citizens to servicing its debt. At the end of 2010, outstanding sovereign debt totalled US$41 trillion globally (UNEP and Global Footprint Network, 2012

UNEP (United Nations Environment Programme) and Global Footprint Network. 2012,A New Angle on Sovereign Credit Risk E-RISC: Environmental Risk Integration in Sovereign Credit Analysis, Geneva.. .

), severely undermining the credit ratings of many countries (ibid.) and thus jeopardizing public spending and downward accountability.

Avoiding regulation

In addition, tax havens and financial instruments that allow individuals, companies and governments to channel illicit funds or divert legal income to avoid levies, fees and taxes are beyond the reach of most forms of regulation. The scale of illegal financial flows and corruption is significant. The IMF estimates that offshore financial centres with limited jurisdiction held around US$5 trillion in assets and liabilities at the end of 2009, while in comparison the cross-border assets and liabilities of the United States, France and Germany combined amount to US$8 trillion (Gonzalez and Schipke, 2011

Gonzalez, Maria and Alfred Schipke. 2011,Bankers on the Beach, Finance & Development, June 2011: 42-45.. .

). Other estimates of the extent to which multinational corporations use offshore financial centres for banking assets and foreign investment run as high as US$18 trillion, which is roughly equivalent to a quarter of the world’s GDP (Shaxson, 2012

Shaxson, Nicholas. 2012,Treasure Islands: Tax Havens and The Men Who Stole The World, Vintage Publisher.. .

). Recent data shows that illicit financial flows reach significant levels in a number of countries (Figure 10.4).

The 130th Assembly of the Inter-Parliamentary Union unanimously adopted a resolution on risk-resilient development in March 2014 which

Figure 10.4 Illegal financial flows as a percentage of consumption

(Source: GFI, 2014

GFI (Global Financial Integrity). 2014,Illicit Financial Flows from Developing Countries: 2003-2012, Authored by Dev Kar and Joseph Spanjers. December 2014.. .

	204 Part III - Chapter 10 short-term gains (UNISDR, 2013a x UNISDR. 2013a,Global Assessment Report on Disaster Risk Reduction: From Shared Risk to Shared Value: the Business Case for Disaster Risk Reduction, Geneva, Switzerland: UNISDR.. . ). As such, the manner in which the sector contributes to risk accumulation is part of its very nature. This conundrum is compounded by the fact that the current measures of success for both private actors and governments are not compatible with goals such as equity and biocapacity. Where short-term profit and return on investment are key performance indicators, the risk generated by high-yielding investments elsewhere in society is ignored or discounted. If the main metric for success is GDP growth, questions of social equity or the growing gap between the ecological footprint and biocapacity recede into the background. Instead, this concern for economic growth often skews priorities, shifting government attention from serving its citizens to servicing its debt. At the end of 2010, outstanding sovereign debt totalled US$41 trillion globally (UNEP and Global Footprint Network, 2012 x UNEP (United Nations Environment Programme) and Global Footprint Network. 2012,A New Angle on Sovereign Credit Risk E-RISC: Environmental Risk Integration in Sovereign Credit Analysis, Geneva.. . ), severely undermining the credit ratings of many countries (ibid.) and thus jeopardizing public spending and downward accountability. Avoiding regulation In addition, tax havens and financial instruments that allow individuals, companies and governments to channel illicit funds or divert legal income to avoid levies, fees and taxes are beyond the reach of most forms of regulation. The scale of illegal financial flows and corruption is significant. The IMF estimates that offshore financial centres with limited jurisdiction held around US$5 trillion in assets and liabilities at the end of 2009, while in comparison the cross-border assets and liabilities of the United States, France and Germany combined amount to US$8 trillion (Gonzalez and Schipke, 2011 x Gonzalez, Maria and Alfred Schipke. 2011,Bankers on the Beach, Finance & Development, June 2011: 42-45.. . ). Other estimates of the extent to which multinational corporations use offshore financial centres for banking assets and foreign investment run as high as US$18 trillion, which is roughly equivalent to a quarter of the world’s GDP (Shaxson, 2012 x Shaxson, Nicholas. 2012,Treasure Islands: Tax Havens and The Men Who Stole The World, Vintage Publisher.. . ). Recent data shows that illicit financial flows reach significant levels in a number of countries (Figure 10.4). The 130th Assembly of the Inter-Parliamentary Union unanimously adopted a resolution on risk-resilient development in March 2014 which Figure 10.4 Illegal financial flows as a percentage of consumption (Source: GFI, 2014 x GFI (Global Financial Integrity). 2014,Illicit Financial Flows from Developing Countries: 2003-2012, Authored by Dev Kar and Joseph Spanjers. December 2014.. . .)	Page 1 Page 10 Page 20 Page 30 Page 40 Page 50 Page 60 Page 70 Page 80 Page 90 Page 100 Page 110 Page 120 Page 130 Page 140 Page 150 Page 160 Page 170 Page 180 Page 190 Page 194 Page 195 Page 196 Page 197 Page 198 Page 199 Page 200 Page 201 Page 202 Page 203 Page 204 Page 205 ->Page 206 Page 207 Page 208 Page 209 Page 210 Page 211 Page 212 Page 213 Page 214 Page 215 Page 216 Page 217 Page 218 Page 220 Page 230 Page 240 Page 250 Page 260 Page 270 Page 280 Page 290 Page 300 Page 310