SDG portfolio alignment tool aims to rectify ‘inconsistent and biased disclosures’

By Fiona Nicolson

Impact Cubed has launched a dataset for assessing Sustainable Development Goal (SDG)-alignment across portfolios and individual securities.

The ESG data and analytics specialist said the quantitative tool would address the challenge of “companies’ inconsistent and biased SDG disclosures that are mostly qualitative.”

The new tool provides views of products and services revenue alignment; operational alignment; and combined revenue and operations alignment, across every listed company globally. It also incorporates geo-revenue data, enabling investors “to see not just what a company does, but where it is doing it,” said the firm.

Chris Lee, head of marketing at Impact Cubed, commented: “By considering regional impacts, our dataset offers a more accurate and context-aware view of SDG alignment.”

Alignment to SDGs

To provide an example of how the tool works, Impact Cubed analysed four major indices: the S&P 500, STOXX 600, MSCI ACWI and MSCI Emerging Markets, with each compared to the Morningstar Global Markets benchmark.   

When looking solely at products and services revenue alignment, the S&P 500 emerged as the index most aligned to the SDGs, with 15% of its revenues positively aligned. In comparison, the STOXX 600 demonstrated 2% revenue alignment.

On examining operational alignment, the S&P 500 was the least aligned index on 10 out of the 17 SDGs and was outperformed by the emerging markets index across most SDGs.

When assessing combined revenue and operations alignment, the MSCI Emerging Markets index outperformed all other indices across seven SDGs, especially those associated with social factors.

“We’re just scratching the surface of what’s possible with our SDG data,” said Lee, adding: “Our portfolio construction team is already using this new dataset to create bespoke SDG-optimised portfolios.”