Investing in the UN Sustainable Development Goals: Opportunities for Companies and Investors

15 Pages Posted: 24 Jul 2017

See all articles by Willem Schramade

Willem Schramade

RSM Erasmus University; Sustainable Finance Factory

Date Written: Spring 2017

Abstract

The UN's Sustainable Development Goals (SDGs) are a set of ambitious targets for making the world a better place. For both companies and their investors, the pursuit of SDGs offers a "path to value" while addressing social problems—but a path that presents significant risks as well as opportunities. To prepare themselves for the SDGs, companies and investors will have to take a number of steps: (1) determine the extent of their exposures to those SDGs that are most relevant to their businesses or investment approaches; (2) set specific goals for contributing to the most relevant and material SDGs, which means among other things reflecting such goals in incentives through the use of carefully designed metrics, or key performance indicators (KPIs); and (3) establish a system for measuring and reporting on contributions to the SDGs. For investors, it is important to recognize that not all SDGs are equally investable and that reporting on key SDG performance indicators is still too new and uneven to rely on for investment purposes. To overcome this problem, the author's firm has developed a tagging approach that alerts investors to companies' main SDG exposures. As better data becomes available, the metrics and reporting will improve. Although companies are increasingly referring to the SDGs in their investor communications, corporate discussion of targets and KPIs on the SDGs is rare. But reporting of such KPIs is likely to become the norm as investors begin to expect companies to report on their progress on achieving their goals. The author offers a number of hypothetical KPIs for SDGs while providing several examples of pioneering companies.

Suggested Citation

Schramade, Willem, Investing in the UN Sustainable Development Goals: Opportunities for Companies and Investors (Spring 2017). Journal of Applied Corporate Finance, Vol. 29, Issue 2, pp. 87-99, 2017, Available at SSRN: https://ssrn.com/abstract=3006363 or http://dx.doi.org/10.1111/jacf.12236

Willem Schramade (Contact Author)

RSM Erasmus University ( email )

P.O. Box 1738
Room T09-53
3000 DR Rotterdam
Netherlands

Sustainable Finance Factory ( email )

18
Rotterdam, 3034 SG
0682011037 (Phone)

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