Aligning SDG Goals – The Next ESG Challenge

INTRODUCING THE SUSTAINABLE DEVELOPMENT GOALS

The term “sustainable development” has been in existence for decades — 30 years ago, in 1987, the World Commission on Environment and Development proposed developing new ways to assess progress toward sustainable development in the “Brundtland Report.”

Historically, there was a lack of comprehensive goals or targets for “the future we want” and a lack of adequate monitoring of progress toward enduring human and environmental well-being.  This absence of an overarching framework limited the ability to assess progress toward attaining sustainable development.

This has changed with the adoption of the Sustainable Development Goals (SDGs) by the international community in September 2015. The SDGs are a set of 17 goals that frame the global agenda for sustainable development, including gender equality, sustainable cities, access to clean water, decent work and economic growth, and good governance.

With the SDGs, there is now finally more clarity and transparency around global goals, targets, synergies, and metrics for sustainable development – and this alignment of expectations and financing across the investment value chain is also leading towards more harmonization of ESG/impact reporting standards and metrics (read my colleague Kelly Tang’s recent Blog on “Impact Reporting vs Impact Measurement” for further details).

ALIGNING GOALS ACROSS THE INVESTMENT VALUE CHAIN

The SDGs are being adopted as a new framework and language that investors, corporates, policy makers, and others can use to communicate about and report on impact.

Corporations are already taking action— and SDG leadership, with a majority of global businesses saying that they are engaging or are planning how to engage with the SDGs.

 

Meanwhile, market participants are following suit – according to a study by ShareAction (2016) 95% of institutional investors plan to engage with investee companies about SDG issues.

INDICES CAN PLAY A KEY ROLE IN MAKING THE SDGs AN INVESTMENT REALITY

Over the past few decades, multiple efforts have been made to create aggregate, composite, and country-wide reference indices on environmental trends and sustainable development.  Among these, the UNDP’s Human Development Index (HDI) has been one of the most widely used reference benchmarks.

In 2017, investable indices are also becoming an SDG investment reality.  For example, in March 2017, the World Bank raised its first bond linked to a concentrated stock index of 50 companies that have been identified as making a significant contribution to the advancement of the sustainable development agenda to the U.N’s SDGs.

For additional insights, read our latest paper Aligning Sustainable Development Goals With Investment Objectives or watch our video Making Sustainable Development Goals An Investment Reality.

The posts on this blog are opinions, not advice. Please read our disclaimers.

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