UN SUSTAINABLE DEVELOPMENT GOALS

UN Sustainable Development Goals

WHAT ARE THE SUSTAINABLE DEVELOPMENT GOALS?

In September 2015, the global community - represented by all 193 member states of the United Nations (UN) - adopted the Sustainable Development Goals (SDGs). The 17 SDGs and 169 individual targets will guide the global community’s sustainable development priorities from now until 2030 and seek to “stimulate action […] in areas of critical importance for humanity and the planet”.

The UN Commission on Trade and Development (UNCTAD) has estimated that meeting these targets will require US$5-7 trillion in investment each year from 2015-2030. But the UN and member countries cannot deliver on the SDGs alone; only an estimated US$1 trillion annually will come from public funds, leaving a gap of up to US$6 trillion annually for private capital to fill. 

ALIGNING RESPONSIBLE INVESTMENT WITH THE SDGS

Many PRI signatories believe that their investments in companies (and other entities) will only be profitable in the long term if societies and the financial system develop in an equitable and sustainable way. 

Additionally, ultimate beneficiaries (participants in pension funds, clients of insurance companies, etc.) increasingly demand that all parties in the investment chain (markets, asset holders and managers) take their broader long-term interests, and those of future generations, into account. 

The preamble to the Principles for Responsible Investment, signed by more than 1,750 signatories, states: “We recognise that applying these Principles may better align investors with broader objectives of society.” The SDGs act as welcome guidance as to what the “broader objectives of society” are, and should play an important role in the development of the responsible investment agenda for the years ahead.

Undeniably, current responsible investment practices contribute to the “broader objectives of society”, but the contribution is limited and achieving the SDGs through corporate responsibility and responsible investment will require a more dedicated approach. To meet the challenges of the SDGs, responsible investment should not just look at how ESG risks and opportunities affect the risk-return profile of an investment portfolio, but also how a responsible investment portfolio affects those broader objectives of society.

As such, the SDG agenda requires signatories to move from a mere process-based approach of material ESG integration towards an outcomes-based approach that, while achieving market-rate return on investment, explicitly aims to contribute to the sustainability challenges put forward by the SDGs. 
The PRI's 1,750 signatories represent around one third of global private capital. To meet the SDG challenge, they would have to invest US$2 trillion annually in companies and other investments that directly link to positive SDG outcomes. By 2030, the deadline proposed by the UN, that should amount to cumulative 25% of assets under management having a direct positive contribution to the SDGs. These new flows of private sector capital will be crucial to meeting the global challenges put forward by the SDGs.

In 2017, the PRI published its-10 year strategy, our Blueprint. The SDGs are firmly embedded within the strategy as one of the nine pillars that will define our work over the next decade. 

THE INVESTMENT CASE

In October 2017, the PRI published the SDG Investment Case in partnership with PwC. The report makes the case for why the investment community should adopt an active role in achieving real world impact through implementation of the SDGs. 
It outlines why there is an expectation that investors will contribute to the SDGs and – crucially – why investors should want to contribute to them:
 
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.

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THE pri's work

Our SDG work programme is guided by an advisory committee drawn mainly from our signatory base. We have two active SDG-focused working groups; one looking at asset allocation and another at active ownership. See this page for more information on each group and to see a list of members.  More details will be provided on the expected outputs of each group as they progress.

WHAT WE WILL DO

The PRI will develop a programme that stimulates and helps signatories to align their responsible investment practices with the broader sustainable objectives of society, as currently best defined by the SDGs. We will provide research and education, facilitate collaboration and embed the SDGs in our work on public policy, investment practices (investment strategy, asset allocation, manager selection, incorporation in asset classes) and active ownership.
Wherever possible, the PRI will do this in collaboration with UN organisations, including our UN partners: UNEP FI and UN Global Compact. A board policy committee has been installed to oversee the PRI’s SDG activities and serve as a soundboard to the executive. Activities planned for the next PRI strategy cycle (2018-2021) include:
 
information and communication about the UN SDGs to all signatories;  
regularly updating The SDG investment case, as new information becomes available and investors gain experience in contributing to the SDGs;  
guidance on how the SDGs (and ESG issues in general) can be incorporated in asset allocation decisions by asset owners and multi-asset fund managers;  
guidance on how the SDGs can be incorporated in active ownership activities across asset classes;  
a tool that will help investors identify their current contribution to the SDGs and to develop their SDG strategy;  
contributing to a select number of initiatives to identify investment opportunities that contribute to the SDGs;  
incorporating the SDGs in the regular guidance documents for investment practices and in collaborative engagements;  
developing a policy agenda for SDGs that are not yet easily investable and require public policy changes to make them investable;  
the PRI will contribute to the development of a global system of standardised, comparable SDG corporate reporting standards.

CONTACT US

To better understand investors’ needs, interests and opportunities, the PRI needs to hear from signatories. For more information on our SDG work, contact Jake Goodman

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