Beyond Funding: OECD Says Smarter Governance Is the Key to Accelerating Global SDG Progress

The OECD warns that fragmented policymaking across water, energy, industry and urban development is slowing progress on the Sustainable Development Goals, despite growing investments and policy commitments. It urges governments, development partners and businesses to adopt integrated planning and coordinated investments to improve resilience, boost economic growth and accelerate sustainable development before 2030.

The world is running out of time to achieve the Sustainable Development Goals (SDGs), but the OECD argues that the biggest obstacle is not simply a shortage of funding. Instead, governments continue to develop policies for water, energy, industry and cities separately, even though these sectors depend heavily on one another. The report warns that fragmented decision-making is slowing progress, increasing costs and weakening resilience to climate change, rapid urbanisation and economic shocks. With only 36% of global SDG targets on track or making moderate progress, 48% showing insufficient progress, and 15% moving backwards, the OECD says governments must shift from isolated policymaking to integrated governance to accelerate sustainable development before 2030.

Breaking Policy Silos Can Deliver Faster Development Results

The report finds that disconnected governance has become one of the biggest barriers to sustainable growth. More than 2.1 billion people still lack safely managed drinking water, 3.4 billion lack safely managed sanitation and only 56% of global wastewater is treated. At the same time, 645 million people remain without access to electricity, and 2.1 billion continue using polluting cooking fuels.

These problems are interconnected. Water systems require energy; industries depend on both water and electricity; and expanding cities increase demand for all three. When governments plan these sectors independently, infrastructure becomes more expensive, resources are wasted and policy outcomes weaken. The OECD recommends creating stronger coordination between ministries, integrating sustainability into public budgeting and using evidence-based planning to maximise the impact of every public investment.

Smarter Investments Can Strengthen Economies and Climate Resilience

The report highlights major economic opportunities from integrated planning. Meeting global water security alone could require around USD 1 trillion annually, yet better coordination between water management, agriculture, energy and urban development could significantly reduce long-term costs. Likewise, cities are expected to accommodate nearly 5 billion people by 2050 while already accounting for about two-thirds of global energy demand and nearly 70% of greenhouse gas emissions.

Governments are encouraged to prioritise investments that deliver multiple benefits simultaneously, such as renewable energy linked with efficient water systems, climate-resilient infrastructure, public transport, circular economy projects and nature-based solutions. Restoring wetlands, expanding urban green spaces and improving wastewater recycling can reduce disaster risks, strengthen biodiversity and lower infrastructure costs while supporting economic growth.

Development Partners and Businesses Have a Bigger Role to Play

The OECD stresses that international development partners should move beyond financing individual projects and instead support integrated national programmes combining infrastructure, institutional reforms and policy coordination. With the annual SDG financing gap in developing countries estimated at around USD 4 trillion, development banks and donors will need to use blended finance, technical assistance and policy support more strategically.

For the private sector, the transition presents significant investment opportunities in renewable energy, water technologies, digital infrastructure, smart cities, sustainable construction and industrial decarbonisation. However, companies also face growing regulatory risks as governments tighten climate policies, environmental standards and sustainability reporting requirements. Businesses that invest early in resource-efficient technologies, cleaner manufacturing and resilient supply chains are likely to become more competitive as demand for sustainable solutions continues to grow.

Policy Coherence Could Become the Defining Development Strategy

Rather than calling for entirely new development goals, the OECD argues that governments should improve how existing policies are designed and implemented. Stronger coordination across ministries, better cooperation between national and local governments, integrated infrastructure planning and improved monitoring systems can help countries generate greater returns from limited public resources.

The report also emphasises that climate change, digital transformation, industrial competitiveness and urban growth can no longer be managed separately. Every infrastructure project, industrial policy or public investment should contribute to multiple national objectives instead of solving only one problem. For policymakers, this means embedding policy coherence into budgeting, procurement, regulation and long-term planning.

The OECD concludes that countries able to coordinate water, energy, industry and urban development will be better positioned to reduce public spending pressures, attract private investment, strengthen climate resilience and accelerate progress toward the SDGs. For governments, development partners and businesses, integrated policymaking is no longer simply good governance, it is becoming an economic necessity for achieving sustainable and inclusive growth beyond 2030.