The Sustainable Development Goals (SDGs) has created a solid common ground for inspiration and co-operation - perhaps most significantly by widening the scope of actors involved from the usual suspects of governments to civil society to corporations and the finance industry. The UN has stated that significant investments (2,5 trillion USD - per year!) is needed to reach the goals. But is this view shared be the finance sector themselves? Judging from the commitments made during the first year of SDG implementation, many influential investors seems to be prepared to do their part.
A recent example of how the industry is adapting to the new set of standards for sustainability is the move by a number of European institutional investors, among them Swedish AP funds 1-4, to release a short paper on implementation of the SDG’s. In the paper, investors clearly state the importance of radically increasing the investment in businesses that creates a positive social and environmental impact – at the same time as delivering market rate financial returns. Further, investors state the need for better measurements of sustainability from an investor's perspective.
Unsurprisingly, investors are looking towards those goals that are closely linked to sectors traditionally relevant to the financial industry: According to a survey published by ”ShareAction” promoting decent work and economic growth (goal 8); building industry, innovation and infrastructure (goal 9); and lastly taking action to curb climate change (goals 13) are deemed to have great potential to meet long-term investment objectives of the industry. However, the second most popular area for the surveyed investors to take action within (after climate change) was goal 5; to achieve gender equality and empower girls and women. Could it be so that the (largely male-dominated) financial sector is beginning to realize the untapped potential of women in business?
While there are general trends and areas of interest, it is also clear that investors will design their own approach towards contributing to the SDGs. As an example, the Swedish pension funds have chosen different strategies. The first fund (AP 1) will focus on resource efficiency in terms of natural resources, human capital and financial capital, while AP 2 have a broader focus including areas such as diversity, climate and transparency. AP 3 and 4 has put down clear goals for certain time periods as well as engaging in more elaborate discussions on how sustainability can be integrated into their ordinary work.
The aforementioned commitments paints a bright future for investors' engagement in the global agenda on SDGs. That being said, it is important to note that these commitments need to be put into action. In fact, many committed investors still lack clear public information on goals setting and/or description how they will go about to implement their sustainability work. Hopefully the AP funds, together with their co-signers, can take lead for these statements concerning the SDGs not to stop at words but in concrete action.
All funds in Sweden are expected to provide information on how they integrate sustainability in their investment decisions according to the Fund Investigation (SOU 2016:45) that is expected to turn into law in 2107. After a long debate the initial idea to demand Co2 reporting was dropped; rather the Fund Investigation sees that a self-regulating mechanism through which all Funds (and Alternative Investment Funds) disclose their systematic approach to sustainability for customers will lead to incorporation of best practice over time. Read an article with the secretary for the Investigation here.