Imagine zero hunger, zero poverty and clean water for all. The Sustainable Development Goals (SDGs) adopted in 2015 by the United Nations offer an aspirational roadmap for governments and businesses — indeed for any organization working to create a better world.
These goals are more ambitious than previous attempts to bring real change to global society and there is a universal call to mobilize private capital toward realizing their promise. This call is critical in light of the estimated $5 to $7 trillion per year required to achieve these goals, according to the United Nations Conference on Trade and Development’s 2014 World Investment Report.
If widely embraced by public companies, the SDGs could be a powerful force driving momentum in sustainable, responsible, impact (SRI) investing.
Investing in the future
SRI investing has grown significantly over the last years, accounting for $1 out of every $5 under professional management (about $8.72 trillion) in the United States, as of 2016. This includes assets invested in strategies that incorporate environmental, social and governance (ESG) factors into portfolio construction. However, ESG-focused strategies are not all created the same and companies that perform well on ESG criteria are not necessarily intentionally focused on goals as aspirational as those set out by the SDGs, even though they may contribute to a better world. And while we could debate what matters most — ends or means — SRI investors would say it’s a “both-and” scenario.
Regardless, if successful in galvanizing companies into action, the SDGs would provide a new framework for investors to align their portfolio strategies with forward-looking intentionality alongside actual economic, social and environmental outcomes. SRI investors, a cohort that is growing owing to the interest of women and millennials, should welcome the ability to build on the role of ESG factor analysis in managing risk and identifying superior performing companies, via standardized reporting that will enable the identification of truly intentional companies that are passionate about transformational environmental and social impact.
By using the SDGs as a framework to make business decisions, a company will send a strong message to investors and consumers, acknowledging its role as a steward of the planet. The combination of the world’s most powerful organizations, governments, institutions and companies working towards common goals is our biggest hope.
Steve Schueth, President, First Affirmative Financial Network, and Ana Olaya-Rotonti, Associate Producer, SRI Conference, [email protected]