A year ago, every company had to have a Big Data story. Now, no initiative is complete without AI and machine learning. Extra points for “blockchain.”
Next up: companies, asset owners and fund managers touting their alignment with “the SDGs.” If you don’t know already, those are the Sustainable Development Goals, with colored icons to represent 17 ambitious targets world leaders agreed to reach by 2030.
The SDGs, sometimes referred to simply as “the global goals,” are the successors to the Millennium Development Goals, which through 2015 helped drive remarkable global progress against extreme poverty, hunger and gender parity in education. The new global goals are even more ambitious, covering developed as well as developing countries and presuppose an active role for private industry and private investors as well as the usual suspects of foreign aid agencies, development banks and philanthropies.
As such, the goals have become a unifying framework to tie together the disparate actions of corporations, non-governmental organizations, entrepreneurs and investors, as well as government ministries and traditional development players. In recent months, pension and sovereign wealth funds, as well as corporations and major banks and wealth managers, have declared their alignment with one or more of the Global Goals.
Whether that signals the opening of the spigots of private capital for goals such as end poverty in all its forms everywhere (No.1) or achieve gender equality and empower all women and girls (No.5) remains to be seen. Experts have pegged the incremental costs of hitting the SDG targets at $5 trillion to $7 trillion a year for the next dozen years or so. It may be more helpful to see the SDGs as a compass pointing to new market opportunities worth $12 trillion a year in savings and revenues.
The interest among investment managers to map their investments to the SDGs has produced a welter of frameworks to turn the goals into actionable strategies. Reporting mechanisms and definitions vary from framework to framework, sometimes making integration difficult.
The Global Impact Investing Network last year called on impact investors to align investments with the global goals. The GIIN is mapping its widely used IRIS indicators to the SDGs. It has profiled the SDG investing strategies of New York fund manager Encourage Capital, Dutch pension fund PGGM and fund manager Triodos Investment Management, and RobecoSAM in Zurich (see, Call to Action: Align Global Assets with Global Goals).
“The SDGs help clients better understand the impact we create because now we can put our approach in a broader global context,” said RobecoSAM’s Daniel Wild.
Last year, Sonen Capital, a boutique impact investment advisor in San Francisco, mapped its investment strategies within the SDG framework. “SDGs are third-party universally recognizable objectives that provide additional framework for investment and have the potential to mobilize other stakeholders and significant capital in a coordinated manner to work towards achieving a common set of goals,” Raúl Pomares, Sonen Capital’s founder, told ImpactAlpha.
Funds that want to map their social impact have found the global goals provided a ready framework. Fifty Years, a venture fund in San Francisco with nearly two dozen investments in synthetic biology and food tech, health sensors and robotics, requires each one to be explicitly linked to one or more of the goals. “We were looking for the world’s biggest challenges,” Seth Bannon, co-founder and partner at Fifty Years, told ImpactAlpha. “The world’s best minds had already laid them out in the SDGs.”
With no single satisfactory way to apply the global goals to their own work, some organizations have developed their own SDG frameworks. Toniic, the global network of impact investors, is building its own map. “We couldn’t believe this hadn’t been done,” said Adam Bendell, Toniic’s new CEO, who plans to make the network’s framework available to other investors.