A guest blog by Jo Mountford, Responsible Investment Officer at ShareAction
The Sustainable Development Goals, ratified by 193 countries at the UN Sustainable Development Summit in September 2015, lay out an undeniably ambitious plan for human development to be achieved by 2030. Although it was governments who signed up to deliver the Sustainable Development Goals, the UN recognises that it will be impossible to achieve these Goals without action by many stakeholders, working in partnership with each other. Of these stakeholders, the role of the private sector is vital. Many corporates have already begun making plans to contribute to the achievement of the Goals; indeed, some of them will rely on the strategies of major corporations. The achievement of Goal 8, for example (‘Promote inclusive and sustainable economic growth, employment and decent work for all’) will require the private sector to create opportunities for employment, and making sure that their employees are well-treated and able to earn a decent living.
But can businesses really be expected to contribute to the Goals without running the risk of them being co-opted to promote their own interests, rather than maintain their focus on helping the poorest and protecting the environment? This cynical standpoint is an easy one to adopt, but at ShareAction, we believe that the private sector’s contribution will be absolutely crucial to achieving the Goals. There is scope for mutual gain without the focus being shifted from benefitting those most in need. That said, it’s important that businesses are engaged with on this topic, to make sure that they really are contributing to the Goals in a way that helps those most in need. And it’s the investors that hold shares in private companies that we believe can play this role.
Institutional investors come in a range of different shapes and sizes: pension funds which exist to fund their members through retirement; foundations with a charitable mission; and investment managers who manage money on behalf of other investors. All these institutions invest in companies in order to generate returns, and as shareholders they have certain rights over the companies they invest in. Investors can choose to ask the companies they are invested in to act in a way which contributes to the Goals; whether that’s by asking them to take action to eradicate forced labour in their supply chain, promote gender diversity in their workforce, or develop sustainable, low-carbon business models. Investors can also choose to invest in companies which are already acting in a way which contributes to the Goals – or take money out of investments in companies that they consider to be doing too little
So why would an institutional investor choose to support the Goals through their investments? ShareAction recently conducted a survey to find out just that. We asked over 50 global institutional investors about their attitudes towards the Goals. We found that 75% of those surveyed believe that acting to support the Goals will bring them reputational benefits, 65% believe that supporting the Goals is in line with their legal fiduciary duty, and 62% believe that taking action to support the Goals will offer them opportunities to increase their investment returns! Our report ‘Transforming our world through investment’ presents some fantastic examples of how investors are already putting their weight behind the Goals: from investing in innovative healthcare technologies in emerging markets, to avoiding investments in companies that do not provide safe working environments for women. In fact, 75% of those we surveyed are already taking action which contributes to 3 or more of the 17 Goals, and action looks set to increase in future.
Whilst these examples are very encouraging, there are still a number of barriers to investors wishing to support the Goals. Investors want more information about how the Goals are relevant to them and align with their investment objectives. They also need guidance on what action they can take to support the Goals, as well as more information from companies about their activities and impacts. But there’s no doubt that the appetite among the investment community to support the SDGs is there. For long-term investors, supporting long-term goals that will generate the conditions for sustainable, healthy global growth is a smart decision, and one we hope many more will make in the years to come.
For more information you can get in touch with Jo at firstname.lastname@example.org