This chapter discusses the concept of sustainable development. The Brundtland Commission defined ‘sustainable development’ as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’. The operationalization of this concept has proven to be controversial. The pressure to resolve the controversies surrounding sustainable development has intensified as the urgency and severity of the challenges of climate change and meeting the Sustainable Development Goals (SDGs) have grown. This has slowly pushed all financial sector actors—not just development financing institutions—to pay more attention to the environmental, social, and governance (ESG) implications of their own operations and those of the entities and operations they fund. This trend seemed to reach an inflection point in 2019 so that ESG considerations are now becoming ‘mainstream’. The chapter analyses this trend and its implications for the financing and operationalization of sustainable development. It also describes some key events of 2019 that highlight the trend towards ‘mainstreaming’ ESG issues, and considers challenges relating to this trend.
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