Responsible investors key to global sustainable development
investmentexecutive.com | Published April 17, 2017
There’s a world of opportunity to help your clients who are looking to make a difference while creating long-term value in the process. The challenge can be knowing where to start. Fortunately, a global framework for sustainable development has emerged to serve as a meaningful launching point for helping investors seek opportunities to contribute to positive societal change.
In 2015, the United Nations (UN) adopted the Sustainable Development Goals (SDGs), a set of 17 goals that serve as a blueprint for achieving a more sustainable, inclusive and prosperous world for all by 2030. The SDGs consist of ambitious goals for all countries. In addition to supporting humanitarian objectives such as ending poverty, eliminating hunger, and improving access to clean water and sanitation, the SDGs also focus on responsible resource management, improved gender equality, responsible consumption and production, full employment, economic growth and improved access to clean energy. In short, they encompass the environmental, social and economic dimensions of sustainable development.
Although global in scope, achieving the SDGs will require meaningful action at the national, regional and local levels. Governments will be responsible for leading these efforts, but investors will play an essential role as well.
The UN Conference on Trade and Development estimates that between US$5 trillion and US$7 trillion of investment capital will be required annually to achieve the SDGs by 2030. Much of this capital will be needed to finance the transition to clean energy as well as climate change mitigation efforts. However, significant investments in food security, telecommunications, transportation, water and sanitation, health and education will also be required. These are all areas in which advisors and asset managers who have expertise in responsible investments (RI) will be able to help their clients look for profitable and impactful investments.
RI incorporates environmental, social and governance (ESG) factors into the selection and management of investments. Thus, it’s no surprise that responsible investors and companies have been early adopters of the SDGs. Recent analysis from MSCI ESG Research found that 41 companies in the MSCI ACWI index already referenced the SDGs in some way nine months after the goals were adopted in September 2015.