The sustainable development goals (SDGs) are a shared to-do list for the global economy, say large asset owners that have adopted them in their investment strategies.
The largest fund in Europe, ABP, and a large and fast-growing Australian fund, Cbus Super, have both adopted the SDGs.
Anne Simpson, investment director of sustainability at the largest fund in the US, the California Public Employees’ Retirement System, where the SDGs are also under consideration, says the SDGs are not just a moral imperative, they are an economic necessity.
“As a large investor, we have nowhere to hide from the world’s problems and risks. But we are not in a position to tackle them without a public policy framework. The SDGs provide a consensus on a shared to-do list,” Simpson said. “Until now, investors haven’t had a legitimate framework to think about allocating capital and managing risk.”
Similarly, Josepha Meijer, vice-chair of ABP, said the SDGs provide a widely supported frame of reference, a vision to the world that is broad and has a long timeframe.
“We think they’re a gift from the UN to the world,” she said. “As a pension fund, we have a vested interest in helping to achieve those goals as we think they’ll shape the world the beneficiaries live in, and also shape areas of growth and provide a more stable economy. They create alignment for a common vision and avoid further fragmentation.”
Alexandra West, portfolio head of strategy and innovation at Cbus Super, said there are two reasons investors should align with the SDGs.
“Investors need progress on the SDGs because they’ll assure a stable economy and drive economic growth,” West said. “And the SDGs need us; without mainstream institutional investment, the SDGs won’t be realised. As long-term value creators, we rely on a sustainable economy and economic growth. We can’t afford to sit on the sidelines and leave it to others.”
West pointed out that only 10 per cent of investment required for the SDGs will come from government.
“We need the SDGs to be realised but unless there is collective action they won’t be achieved,” she said.
ABP has helped developed taxonomies to provide clear guidance on what types of investments qualify as sustainable development investments.
West said developing a strategy for how to contribute to the SDGs was very difficult.
“There’s no how-to guide,” she said. “The work of ABP and PGGM is very useful for investors in how to invest in the SDGs.”
Simpson said until now there has never been a framework that bundles up the world’s problems and opportunities.
“The SDGs are very helpful for investors, they give us a navigation route. We now have milestones that will be helpful for investors.”