The investment community should become more engaged with the UN Sustainable Development Goals (SDGs) according to a new report, The SDG investment case, from the PRI and PwC on why the investment community should adopt an active role in achieving real world impact through implementation of the SDGs.
The report outlines five compelling factors, from being a critical part of their fiduciary duty to the use of SDGs as a capital allocation guide. It also explains what the UN SDGs are, as well as why there is an expectation that investors will contribute to them and – crucially – why investors should want to contribute to them. As Paul Polman, CEO, Unilever noted in the report: “The SDGs offer the greatest economic opportunity of a lifetime”.
Key messages from The SDG investment case include:
- The SDGs represent the globally agreed world’s most pressing environmental, social and economic issues and as such serve as a list of the material ESG factors that should be considered as part of an investor’s fiduciary duty.
- Large institutional investors – which can be considered as universal owners – with their portfolios exposed to growing and widespread economic risks, can protect their long-term financial performance by encouraging sustainable economies and markets.
- Achieving the SDGs will be a fundamental driver of economic growth which, in the long term, will boost corporate revenues and earnings and, in turn, equities and other assets.
- A significant proportion of currently external costs such as environmental damage or social upheaval might at some point in the future be forced into companies’ accounts. The SDGs provide a clear risk framework for both companies and investors.
- Providing solutions to sustainability challenges offers attractive investment opportunities. Investors can implement strategies that target SDG themes and sectors, with opportunities available in most asset classes.
“The SDGs will have an important impact on the future development of the economy and financial markets,” says Kris Douma, Director of Investment Practice & Engagement, the PRI.
“For institutional investors who consider themselves universal owners, not meeting the SDGs will potentially bring macro financial risks. But more importantly, as drivers of global GDP growth, they are relevant for investors and provide major investment opportunities.”
Louise Scott, Global Sustainability Director at PwC, concludes, “The SDGs present an enormous growth opportunity for investors, organisations and the global economy. Solving them will mitigate the risks that they pose to all businesses.
“Every investor should want to understand how to play their part in achieving them.”