UN SUSTAINABLE DEVELOPMENT GOALS
WHAT ARE THE SUSTAINABLE DEVELOPMENT GOALS?
In September 2015, the global community committed to adopt a set of goals - the SDGs - to end poverty, protect the planet and ensure prosperity for all as part of a new sustainable development agenda. Each goal has specific targets to be achieved over the next 15 years.
ALIGNING RESPONSIBLE INVESTMENT WITH THE SDGS
The PRI Mission calls on signatories to play a role in creating a sustainable global financial system which will "reward long-term, responsible investment and benefit the environment and society as a whole.” The preamble to the six Principles recognises that applying the Principles in investment decisions not only supports long-term value creation but may also better align investors with the broader objectives of society - in other words, the SDGs.
Many investors believe that investments in companies will only be profitable over the long term if the global financial system and societies grow in a sustainable and equitable way. And while responsible investment has typically focused on how ESG factors affect the risk-return profile of investment portfolios, it has tended to overlook how it supports the 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 1,700 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.
THE SDGS INVESTMENT CASE
Achieving the SDGs is at the core of the responsible investment agenda over the next ten years. The investment case for doing so is clear:
- 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.
WHAT WE WILL DO
To help align signatory investment decisions and our own work with the SDGs we will:
- develop an SDG programme that helps signatories to align their responsible investment practices with the SDGs;
- integrate the SDGs into our work on public policy, investment practices, engagement and the Reporting Framework
- define our position in the SDG landscape and collaborate with relevant organisations;
- develop our Sustainable Financial System programme;
- provide guidance on how to integrate the SDGs in investment strategies, policies and decisions;
- integrate the SDGs in active ownership;
- promote improved disclosure on ESG issues and the SDGs by companies and other entities;
- provide information on the SDGs to create awareness and education, as well as promoting research;
- promote investor collaboration on the SDGs;
- define and measure the impact of current PRI and investor activities in support of the SDGs and communicate publicly about the ways in which the PRI's current activities support the SDGs.
The Terms of Reference for the SDG Advisory Committee can be found here.
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.