If you take all of the world’s stock markets together, they have a market capitalization of more than US$76 trillion. On an average day, investors trade about $170 billion in shares through the NYSE alone. And this is just one segment of a massive global investment market that is both growing and diversifying.
And while earning a return is the primary motivation, there is increasing momentum behind impact investing - the global movement of investors, development agencies, entrepreneurs and philanthropists working to bring financial, social and environmental gains. However, one of the defining challenges for impact investors has been the question of what, precisely, “impact” means and how best to deliver it. The lack of clear answers creates a source of inefficiency and misalignment between the many actors in the impact investing value chain, from beneficiaries to enterprises to financial intermediaries and to the owners of capital.
The UN’s Sustainable Development Goals have the potential to change all that, by providing consensus definitions and disciplines for setting impact goals and tracking progress against them.
This past week, in connection with the 73rd General Assembly, UNDP launched an important new platform to fill market gaps: SDG Impact.
SDG Impact will have three pillars:
- impact management services, to establish universally agreed SDG-enabling investment standards;
- impact intelligence to provide needed insight into local industries, entrepreneurs and projects advancing the achievement of the SDGs in UNDP countries; and
- impact facilitation through the organization of investor convenings for governments and investors to leverage UNDP’s presence in some 170 countries by enhancing matchmaking between investors and enterprises working to achieve the SDGs.
SDG Impact will be managed in close collaboration with the Impact Management Project (IMP), as part of a shared vision for a unifying framework of standards, certifications, best practices, and benchmarks in impact investing. It brings together the work of UNDP, the International Finance Corporation (IFC), the Global Impact Investing Network, the Global Steering Group, Principles for Responsible Investment, Global Reporting Initiative, Social Value International, the Organization of Economic Cooperation and Development and the new World Benchmarking Alliance – an unprecedented effort in collaboration.
The UN estimates that achieving the SDGs will require $2.4 trillion in additional investments each year. The figure may seem daunting at first, but we know that the resources are out there. And we know that creating social impact does not have to conflict with creating profit. In fact, it’s estimated that delivering on the SDGs would unleash more than $12 trillion in market opportunities.
The launch of SDG Impact marks the beginning of new partnerships and, prospectively, universally agreed SDG enabling standards that investors have been demanding.
To learn more, visit the SDG Impact website.