What role can institutional investors play in contributing to the UN Sustainable Development Goals?

 

Jo Mountford

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ShareAction is a UK-based charity working across the investment system to promote Responsible Investment, and helps investors better serve savers, society and the environment. The Sustainable Development Goals aim to enhance economic growth, preserve the natural environment, and create more stable and peaceful societies.  We believe that there is a huge opportunity for investors of all shapes and sizes to contribute to these aims, through asset allocation and engagement with companies. We also believe that there is great potential for investors to benefit from the achievement of the Goals, aiming as they do to create a more prosperous, sustainable world.

In order to assess investors’ potential to contribute to the Goals and benefit from them, we decided to conduct a survey of investors across the globe to find out how investors felt about the SDGs and were responding to them. Working with the UN backed Principles for Responsible Investment (PRI), we surveyed 52 institutional investors from around the world, with US$5.9 trillion in total AUM, including investment managers, pension funds and charitable foundations. Through this we built up a picture of investors’ attitudes towards the Goals, their plans around them and the barriers they face to taking action on them. In March, we published a report outlining the findings, and also making a series of recommendations for how institutional investors could be supported to do more.

The results from the study were overall very positive, showing that those who responded think that supporting the Goals are in line with their fiduciary duty, could serve to mitigate risk and even have the potential to enhance their investment returns. The results also show that many of the investors who responded are already making plans to respond to the SDGs, and engaging in activities that support them. For example, investors are supporting Goal 5 (‘Achieve gender equality and empower all women and girls’) by investing in companies that promote opportunities for women, and engaging with companies to improve gender diversity at their organisation. Similarly, investors are supporting Goal 8 (‘Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all’) by engaging with companies about their treatment of workers, including encouraging companies to pay the Living Wage and tackling the use of forced labour in supply chains. From examples such as these, and numerous others outlined in the report, it seems clear that investors can make a difference to the SDGs.

Many philanthropic organisations have investments, which they either manage themselves, or employ asset managers to manage on their behalf. There is certainly a role for philanthropic organisations to play in supporting the SDGs through investment, and they can do this in a variety of ways. For example, the results of the study show that 84 per cent of respondents intend to allocate capital to investments that promote sustainable development, 95 per cent will engage with investee companies on issues incorporated in the SDG framework, and 93 per cent intend to work with other investors. Philanthropic organisations with investments can use all of these tactics and there are a number of organisations that can help with this. For example, the Charities Responsible Investment Network, which ShareAction provides secretariat for, is a Network of 22 foundations which work together to learn from either other about responsible investment, engage with their investee companies, and promote these principles amongst their asset managers.

For philanthropic organisations in particular, acting to support the SDGs through their investments makes sense. The SDGs are long-term – set to run until 2030 – and aim to tackle some of the biggest environmental and social problems facing people and the planet; whatever your charitable mission, supporting the SDGs is likely to be in line with it. Furthermore, achieving some of the goals is also likely to significantly improve global economic growth, and lead to many opportunities for increased returns on investments in future. For philanthropic foundations with a long-term mandate adopting the SDG framework has the potential to enhance financial returns, and provide opportunities to further your mission.

Jo Mountford is Responsible Investment Officer  at ShareAction.


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