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New tools encourage the momentum for SDG investment

Posted On April 13, 2021

Illustration: bleakstar/Shutterstock.com

 

Our world is going through unprecedented times. We have been referring to the US$5-7 trillion per year figure when we talk about the sustainable development needs. However, while COVID-19 is redefining humanity in ways that are still to be fully understood. The global pandemic has exacerbated the situation with additional needs in many countries, while at the same time, international Sustainable Development Goals (SDGs) investments have dropped by a third due to the pandemic, which presents a risk of a sharply diverging world.

The 2021 Financing for Sustainable Development Report (FSDR) of the Inter-agency Task Force on Financing for Development warns that COVID-19 could lead to a lost decade for development. The report recommends immediate actions to prevent this scenario and put forward solutions to mobilize investments in people and in infrastructure to rebuild better.

The good news is that the private sector has long recognized the immense potential behind sustainable investment opportunities. Impact investing alone has been growing annually by 17 percent over the past five years. Recent events are marking significant changes in the investment landscape. The momentum for SDG-aligned investment has accelerated over the past year. Investors are expressing renewed commitment to play a part in building a more resilient world, building on the work we have been witnessing over the last 10 years.

Then, why there is still a gap? Why the supply cannot meet the demand?

There is one key challenge that we heard from investors; they lack the clarity, the insights and the tools to align, measure, manage and communicate their SDG contributions in a consistent and transparent manner. In other words, investors, regardless of how genuine their intentions, face challenges that limit their ability to invest sustainably.

We believe UNDP cannot afford to not to lead as it is our responsibility to deliver on the SDGs.

To respond to this challenge, we at SDG Impact, quickly came up with two concrete, innovative and transformative products:

·         Global standards that provide practical guidance for businesses, bond issuers and investors to embed (economic, social, and environmental) impacts considerations into their decision-making and day to day operations to maximize their positive contribution to sustainable development.  In other words, we provide standards aim at transforming the way we do business and invest to achieve the SDGs.

·         SDG Investor Platform – that we launched today in partnership with the UN Secretary General’s Global Investors for Sustainable Development (GISD) Alliance- where investors can access to country level market intelligence and insights they need for SDG-aligned investment decisions.

We are excited and proud to bring this innovative and unique tool to the market.

It is innovative as it will help countries to unlock critical financing that is now needed to build forward better from the COVID-19 pandemic.

And it is unique in the sense that although investors already know how to identify high yield opportunities and co-related risks, the maps identify for investors the impact and sustainability areas that combined with high return can be game changers in their portfolio.

All these will not mean anything if we do not turn the market intelligence into action. We already are working hard to do so. Leveraging our country offices excellent relationships at the national level, we organize impact facilitation events where we bring investors and businesses together, we work with big banks at the country level and craft partnerships, we work with global investors and establish regional partnerships. They are all encouraged to use our products and tools to inform their investment decisions and accelerate capital deployment.

But nothing can be achieved alone. The scale and complexity of the issues goes beyond what any sector can address alone. The SDG investor platform is a milestone for our SDG financing work. We call for collaboration and collective action with investors, the private sector, donors, financial institutions, governments, development agencies all have a critical role to play in achieving of the SDGs.