The Sustainable Development Goals (SDGs) have been broadly embraced by financial institutions. This is a positive move, and timely too. The 2019 Edelman Trust Barometer indicates that the finance industry remains the least trusted business sector and is often, quite rightly, blamed for failing to address the great social and environmental challenges of our time.
In this environment, the SDGs offer a unique opportunity, some might say life raft, to align the purpose of finance with globally agreed sustainable development objectives. The United Nations (UN) itself argues that finance must play a critical role in closing a funding a gap in developing countries, estimated to be USD2.5 – 3 trillion per year between now and 2030.
This shift is supported by client demand, with Morningstar reporting a ‘Record-Shattering Year for Sustainable Investing’ in 2019. With this has come a proliferation of funds that claim to invest sustainably, with many linking their investment objectives to the SDGs. Indeed, even ‘mainstream’ investors, like large pension funds and sovereign (state-owned) wealth funds have sought to map their investments to the goals.