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A family from the Hmong ethnic minority in Vietnam.

Fair Finance: How can the global inequality gap be narrowed?

© UNICEF/Truong Viet Hung
A family from the Hmong ethnic minority in Vietnam.

Fair Finance: How can the global inequality gap be narrowed?


Reducing inequality is one of the UN’s flagship goals, but the gulf between rich and poor worldwide, remains persistently high. In the first of a special two-part series on the financial sector this weekend, Hiro Mizuno, the newly-appointed UN Special Envoy on Innovative Finance and Sustainable Investments, explains how the industry can help to create a fairer, more equitable world.

Hiro Mizuno of Japan. the UN Special Envoy on Innovative Finance and Sustainable Investments.
UN Special Envoy Hiro Mizuno. Hiro Mizuno

Before his appointment as Special Envoy, on 30 December 2020, Mr. Mizuno, of Japan, served as Chief Investment Officer of the Japan Government Pension Investment Fund (GPIF). He serves on the board of the Principles for Responsible Investment Association (PRI, an UN-backed body that aims to create sustainable markets that contribute to a more prosperous world for all), and has taken part in UN discussions on promoting the Sustainable Development Goals.

UN NEWS: How did you come to be involved with the UN and sustainable investment?

Hiro Mizuno: My journey started with a charity dinner around seven years ago, when I found myself sat next to former UN Secretary-General Kofi Annan. I was a partner at a private equity firm at the time, and Mr. Annan asked me why Japanese investors were not interested in ESG (Environmental, Social and Governance investing, otherwise known as sustainable investing). I couldn’t answer, because this was the first time that I’d heard of ESG! When he explained, my first reaction was that, in fact, this sounded very much like a natural fit with Japanese corporate philosophy.

I’ve been working in the financial sector throughout my professional life. However, up until I became the Chief Investment Officer of the Japanese Government Pension Investment Fund (GPIF), I had always struggled with the concept at the heart of the investment industry; that, to win, you have to beat the market by outsmarting everyone else. I questioned whether the industry was adding any added value to society.

Then, when I joined the GPIF, which holds more than $1.5 trillion in assets, I realised that we effectively were the market. This is when I came up with the idea of universal ownership: as universal owners, it made more sense for us to contribute, by making the system better for everyone.

We soon started to get questions from the big portfolio managers, asking us what we were trying to achieve, and how they should respond. We started to use the Sustainable Development Goals (SDGs) as a convenient way to explain our strategy to corporate executives.

A farmer harvests rice in Bantaeng, Indonesia.
CIFOR/Tri Saputro
A farmer harvests rice in Bantaeng, Indonesia.

UN News: How can the financial sector address the growing gap between rich and poor?

Hiro Mizuno: The famous French economist Thomas Piketty, writes that the returns on investment outperform the economic growth rate. This means that those who hold financial assets become wealthier than the general workforce, who earn money from a salary. His conclusion was that, as a result, the gap between rich and poor continues to widen.

When I was at the Japanese Government Pension Investment Fund, my aim was to reduce that gap. We handled huge financial assets and, by growing the fund, we could use pensions to allow ordinary people to benefit from the returns.

As CIO, inequality was always on my mind, all kinds of inequality, including between men and women, and between the Global North and Global South. If you look at the 17 SDGs, you can classify them as being about either sustainability, or inclusiveness.

Achieving inclusiveness is, of course, a way of reducing inequality, but so is sustainability: if we fail to deal with the climate crisis, we will be creating a sustainability gap between past and future generations, one that is unfair on those who will be left to deal with a world that is in a worse state than at present.

A woman combs her granddaughter's hair outside their home in Maharashtra, India.
© UNICEF/Dhiraj Singh
A woman combs her granddaughter's hair outside their home in Maharashtra, India.

UN News: Should the financial system be completely overhauled?

Hiro Mizuno: One of the problems with the financial system is that it’s largely based on an investment theory that is at least thirty years old. Redesigning a system takes a long time. It may, eventually, work much better, but expending the effort may mean doing nothing else for too long.

We only have 10 years to achieve the UN Sustainable Development Goals, and that is not enough time to change the whole system. What we can do is try to address technical hurdles. If we do that, we’ll get less pushback from investment professionals.

It’s true that many of those who work in finance feel constrained by the system, but things are changing: 10 years ago, investment professionals felt awkward about putting the word “sustainable” in their portfolio, but now that is seen as being acceptable.

What we need, I think, is much more innovation. There are so many technically smart people in this industry and, if we can address technical issues, there will be a domino effect that will lead to real, systemic change. 

UN News: What can you achieve as Special Envoy?

Hiro Mizuno: I’ve only been in this role for a short time, and I’m still trying to figure out what leverage I will have, but what the UN certainly has, is the power to bring decision-makers together to solve some of the world’s greatest problems. I’m very excited to work with the different parts of the UN System, as well as with the Secretary-General, to see how we can achieve change.

My goal is to use the financial sector to speed up the transition to a more equitable world. At a more practical level, I want to make investments more compatible with the Sustainable Development Goals. 

As we head towards to UN climate conference in November (COP26, due to be held in Glasgow in November), I want to see us create momentum, and get businesses aligned between themselves, as well as with our social and environmental goals. One thing I’ve learned throughout my career is that, when everyone is aligned, everything accelerates.