While the coverage universe has slightly decreased from last year (933 companies have been removed from the previous year’s data and replaced with 923 companies), there are now more companies classified as Sustainable Development Investments. In addition to standard reporting for your portfolio construction and risk management processes, the SDI AOP data can be used for the PRI reporting and assessment process. From this year, the PRI includes the opportunity to report on sustainable outcomes with the SDI-AOP data providing a way for investors to demonstrate leadership in this area.
SDG Product and Service Categories
251 companies were affected by the update, which were driven not only by changes in a company’s operating model and revenue composition, e.g. new or discontinued, but also by the following:
- IT solutions: Inclusion of products and services that directly support the SDGs (e.g. grid balancing and drip irrigation for food production)
- Multi-Utility: Recognition of SDI revenues from activities other than energy distribution (e.g. water treatment, distribution and waste management activities)
- Landfill activities: minimal landfill activities are allowed, provided the company reports SDI revenues
- Food: Exclusion of cheese and cereals as healthy food products
- Personal Protective Equipment (PPE): Inclusion of certain PPE products (e.g. facemasks)
Majority, Decisive, Non-SDI
Within the SDI AOP taxonomy, a company is classified as Majority, Decisive or Non-SDI based on the revenue generated from products that qualify for SDI (50%, 10-50%, less than 10%, respectively). Below are the changes made to the coverage universe year-on-year.
In addition, each classification is assigned an indication of the level of confidence in the data underlying the assessment (1-5). In the most recent data, 88 companies had a change in levels of SDI Confidence.
The SDI Design Authority, comprised of representatives from APG, AustralianSuper, British Columbia Investment Management Corporation and PGGM, is responsible for defining the SDI AOP universe. While the new rules will only come into effect once a year, the team is continually reviewing the research agenda. The translation of the taxonomy and guidance of the rules is implemented through Entis using both artificial and human intelligence with the end data being distributed by Qontigo.