The 2018 World Investment Forum saw the launch of several knowledge products, including a paper by the UN Sustainable Stock Exchanges initiative.
On reporting and disclosure, the Task Force on Climate-related Financial Disclosures released its ‘2018 Status Report’ and the Global Investor Organisations Committee published a discussion paper.
The Forum for Sustainable and Responsible Investment released its 2018 ‘Report on US Sustainable, Responsible and Impact Investing Trends’.
It is well known that investment is a lynchpin of implementing the SDGs, and bridging the finance gap demands transparency and disclosure. This week’s brief looks at the most recent events and papers that show where opportunities lie for those working in finance and investment to take action and report, with special attention paid to those launched at the UN Conference on Trade and Development’s (UNCTAD) World Investment Forum.
UNCTAD hosted the biennial World Investment Forum from 22-26 October 2018, in Geneva, Switzerland, on the theme, ‘Investing in Sustainable Development.’ Discussions covered regional issues, investment in an industrialized, globalized world, blockchain, sovereign wealth funds, and SDG-relevant sectors such as gender and agriculture. Feeding into the meeting, previously released reports review elements of UNCTAD’s Reform Package and address the need for systematic reform of the global international investment agreements (IIA) regime. An UNCTAD news release highlights the need to “walk the talk” on investment—by both the public and private sector—to make the SDGs a reality.
The UN Sustainable Stock Exchanges (SSE) initiative released a report at the Forum that examines how security regulators can take action within their mandates on sustainability-related risks and opportunities. The report titled, ‘How Securities Regulators Can Support the Sustainable Development Goals: A sharing of experiences,’ presents an action plan centered around five areas: 1) facilitating investment; 2) strengthening disclosure; 3) clarifying duties; 4) strengthening governance; and 5) building capacity. These are bolstered by supporting umbrella actions on collaboration, standards, sharing, roadmaps and analysis. The publication highlights why the SDGs are important for securities regulators, and presents 35 examples across a variety of contexts where regulators can deliver on their mandate. The SSE initiative is a partnership of UNCTAD, UN Global Compact, UNEP FI and Principles for Responsible Investment (PRI).
An UNCTAD press release on the report quotes UNCTAD Secretary-General Mukhisa Kituyi in noting that the actions are central to security regulators’ key objectives, which are “to protect investors, ensure markets are fair, efficient and transparent, and to reduce systemic risk.” A write-up on Devex is also available.
Also during the Forum, UNCTAD launched an online portal to help bridge the finance gap around needs to implement the SDGs. The website notes that it serves as “a toolbox of resources for all stakeholders” with the purpose of presenting steps and best practices on increasing private investment in SDG sectors. It highlights four key steps to boost financing for the SDGs: leadership, followed by mobilization and channeling of investments, and then the maximization of the investments’ impacts. A separate SDG Knowledge Hub write-up on the portal is forthcoming.
On mobilizing private capital in support of the SDGs, the UN Development Programme (UNDP) and Scottish Government announced a joint two-year program at the Ethical Finance 2018 conference, held from 22-23 October 2018, in Edinburgh, Scotland. The partnership aims to “explore and test new ways of channeling finance to focus on inclusive, nature-based, small and medium enterprises” (SMEs), which often have difficulty accessing finance, and work in SDG-relevant sectors such as agriculture, fishing, and eco-tourism. The Ethical Finance 2018 conference itself focused on how financial actors can invest for return and social value, in line with international frameworks such as the SDGs.
There is a clear business case for ESG reporting, but no single framework or set of metrics can satisfy all users.
On climate, the Task Force on Climate-related Financial Disclosures (TCFD) released its ‘2018 Status Report.’ The report examines current disclosure practices and presents information to help preparers and companies implement TCFD’s recommendations put forward in 2017. Key takeaways include the fact that while the majority of companies disclose some climate-related information, the financial implications are not shared, and few companies describe the resilience of their strategies under different climate scenarios. It notes that disclosure varies across industries and regions.
Combining the above topics, the Global Investor Organisations Committee published a discussion paper urging that companies and setters of environmental, social and governance (ESG) reporting standards cooperate on approaches to ESG disclosure, also summarizing key elements of ESG reporting. Authored by staff from PRI and the International Corporate Governance Network (ICGN), the paper stresses that there is a clear business case for ESG reporting, but acknowledges that no single framework or set of metrics can satisfy all users of ESG data (which include investors, companies and other stakeholders). However, it notes that it would indeed be “beneficial for companies to disclose standardized information at a basic level to complement more customized ESG reporting.” The authors point to the SDGs and TCFD recommendations as guideposts for helping companies and investors think about more systemic issues and risks.
The Forum for Sustainable and Responsible Investment (US SIF) released its 2018 titled, ‘Report on US Sustainable, Responsible and Impact Investing Trends.’ The report highlights that sustainable, responsible and impact investing (SRI) assets have increased 38% since 2016, and that “much of this growth is driven by asset managers, who now consider ESG criteria across US$11.6 trillion in assets.” In total, SRI assets in the US account for US$12 trillion, or nearly 25% of total assets under professional management in the country. A US SIF press release notes that asset managers’ top three issues are climate, tobacco and conflict risk. A Barrons article discusses report and reasons behind managers’ growing embrace of sustainable investing practices.
Additional issues of the SDG Knowledge Weekly can be found here.