The discussion of impact investment and impact measurement, and how they relate to the UN Sustainable Development Goals (SDGs), was a central focus at two interesting events the week of October 7, 2019. SDG Impact, a flagship initiative of UNDP, was featured at the Devex LIVE on “The Future of Development Finance” where the discussion focused on ‘From measurement to progress: How do we get impact measurement right?’ Then, at the UNDP’s SDG Finance Geneva Summit, another panel discussed ‘How to redirect mainstream capital flows to SDG-aligned investment'.
On the first question, the answer is the UN should and must take a leading role in defining impact measurement and ensuring that claims of SDG contributions can be validated. At the Devex panel, the discussion focused on challenges related to the lack of a centrally recognized and respected authority when it comes to measuring impact. UNDP is uniquely positioned to help fill that vacuum, with its neutral reputation, local knowledge, and practical expertise built up through its programmes in more than 170 countries.
As for how to redirect mainstream capital flows to the Global Goals, UNDP is seeking to answer this challenge by equipping the private sector. Based on experience and research, and consultation with a wide range of stakeholders, SDG Impact is developing assurance standards to help guide investors and other providers of capital to make more informed decisions about how to confidently allocate capital towards the SDGs. The first set of standards, for private equity funds, is open for public comment, and assurance standards for bonds and for enterprises are forthcoming. Investors and companies that meet these standards will be able to seek certification and a Seal to demonstrate their compliance, reducing the potential for what is sometimes called ‘impact washing’ - taking credit for unproven results. Transparency and comparability are hallmarks for developing markets at scale. With greater clarity on what activities enable the SDGs, more capital will make it to the right destination and will not be misdirected towards activities that are not achieving results.
It has been truly inspiring to see how the SDGs have been embraced since they were unveiled four years ago. But with just over a decade to go, enthusiasm and good intentions are not enough. Every day, some US$7 trillion changes hands in global markets. Dedicating the equivalent of a single day’s trading each year toward the SDGs would improve lives for all. UNDP is excited to step up and help lead the way to this goal of goals.