Impact Investing Key to SDGs
Monday, 8th October 2018 at 5:14 pm
Impact investing has emerged as a key way to unlock the private capital needed to achieve the Sustainable Development Goals.
Social Impact Hub founder Jessica Roth told Pro Bono News impact investing had an important role to play because the goals could not be realised by government and philanthropy alone.
“We need investment capital to mobilise behind the SDGs to help achieve them. It is very pleasing to see many impact investors around the world now reporting on their progress against the SDGs – they have become a common language,” Roth said.
The United Nations’ SDGs are 17 goals that aim to end extreme poverty, fight inequality and protect the planet by 2030.
The UN estimated funding initiatives to achieve the SDGs would require an additional US$5-7 trillion (A$7-10 trillion) per year.
Social Impact Hub recently released the second edition of its Field Guide to Impact Investing, which described how the SDGs provided an easy framework for organisations to modify their portfolios to create a positive impact.
“Investors have been encouraged to consider how their investments might contribute to achieving the goals,” the guide said.
“Some of the largest pension funds, asset managers, and increasingly charitable trusts and foundations are taking up this challenge and are aligning their strategies with the SDGs.
“Dutch pension fund PGGM, for example, identified six SDG focal goals in which to invest and, more locally, QBE are mapping their portfolios to the SDGs at a higher level.”
The guide said investments could also cross multiple goals, such as a water waste management project involving wetlands development that promoted clean water and sanitation, and life on land through biodiversity.
Roth said impact investing more generally provided a compelling opportunity for charitable trusts and foundations to increase their impact.
“It does not make sense for foundation’s investments to be causing some of the problems a foundation might be trying to solve with their grants,” she said.
“At a minimum, foundations have an obligation to negatively screen their investments, but I think they can do so much more with their investments.
“Foundations are set up for the purpose of doing good in the world, and so arguably all their assets should be used for positive impact.”
Recent research from the Global Impact Investing Network found Australia made up only 3 per cent of the impact investment market.
But Roth said impact investing was becoming more mainstream in Australia through organisations like HESTA and would continue to grow.
“I think [impact investing] will only accelerate in the coming years, especially as more superannuation funds respond to the wishes of their members to invest their superannuation in line with their values,” she said.