Investment Report Highlights SDGs as Improvement over ESG Framework
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17 Asset Management’s report aims to help translate the SDGs into an “actionable investment strategy”.

The report presents a process for building an investment strategy that aligns with the SDGs.

The report highlights early adopters of SDG investing, including select endowments, insurance companies, pension funds and sovereign wealth funds.

23 April 2019: An asset management company has proposed a framework for making the SDGs actionable for investment, by facilitating asset owners’ and institutional investors’ connections with the SDGs. The report argues the SDGs are a “powerful framework” to guide structured investments towards long-term financial value and impact as part of a global shift towards an “impact economy.”

17 Asset Management (17AM) is a global asset management company with the mission of aligning clients’ financial objectives with the advancement of the SDGs. It designs, implements and manages investments and specializes in blended finance and other innovative financing, with the belief that achieving the Goals will “result in superior long-term returns, while also contributing to a world that is economically prosperous, environmentally secure and more inclusive.”

The report titled, ‘Institutional Intentionality: Aligning institutional investors with the global SDG agenda,’ aims to translate the SDGs into an “actionable investment strategy that incorporates the motivations and constraints of asset owners and institutional investors.” The authors state that the SDGs can help institutional investors transition from a “cause no harm” investment approach to one that focuses on driving long-term value through structured investments that will support long-term development impact.

The report notes that the existing environmental, social and governance (ESG) framework of criteria offers minimal direction for investors, while SDG investing provides more “direction and intentionality,” given the SDGs’ standardization and language for areas of impact, as well as their global indicators, which offer an opportunity for investors to track and compare progress. The report also argues that SDG investing can lead to greater improvements in social return on investment (ROI) and thus a greater financial return.

The report presents a process for building an investment strategy that aligns with the SDGs. At the planning stage, for example, the report recommends incorporating SDG mandates into a fund’s objectives, investment guidelines and restrictions to articulate how SDG alignment can support financial outcomes and drive systems-level SDG solutions. During execution, SDG outcomes identified during the planning stage can inform due diligence and portfolio selection as well as help to identify money managers with knowledge of SDG investing. The report shares examples of how other institutional investments have adopted impact investment strategies and dealt with risk.

The report also highlights early adopters of SDG investing, including select endowments, insurance companies, pension funds and sovereign wealth funds. For example, endowments and foundations hold USD1.4 trillion in combined assets. The Intentional Endowments Network is one example of a pioneer in SDG investing. The Network assists in designing endowments to “make a significant and critical contributon to creating a healthy, just and sustainable society” and has developed a strategy to align endowments with the SDGs and the Paris Agreement on climate change.

Another example is Aviva, a British insurance group, which is a “strong advocate for the SDGs.” Avivia invests in the health and well-being of individual people and the overall economy, and tackles issues ranging from climate change to aging populations. Two Dutch pension funds, APG and PGGM, developed a decision tree mapped to the SDGs to identify sustainable development investments that meet financial risk and return requirements while also supporting positive social and environmental impact. APG and PGGM published the decision tree to help others make capital allocation decisions that align with the SDGs.

The report concludes by emphasizing the “tremendous power” of institutional asset owners to shift development pathways, contribute to building an equitable and sustainable future and achieving the SDGs. The report emphasizes that the ability to convert the SDGs into investment opportunities “lies in the partnership between asset owners and intermediaries.”

17AM is a global asset management company that designs, implements and manages investments, and specializes in blended finance and other innovative financing. 17AM’s mission is to align its clients’ financial objectives with the advancement of the SDGs, based on the belief that “achieving these Global Goals will result in superior long-term returns, while also contributing to a world that is economically prosperous, environmentally secure and more inclusive.” [Publication: Institutional Intentionality: Aligning institutional investors with the global SDG agenda]

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