17 March, 2022 / Comment

The UN SDGs explained

By Diane Earnshaw, research and consulting director, Square Mile

Square Mile's Diane Earnshaw on how investors are using the global goals

The UN SDGs explained

The United Nation’s Sustainable Development Goals (SDGs) were established as a universal call to action to build a greener, fairer and better world by 2030. They look to address the global challenges we face including poverty, inequality, climate change, environmental degradation, peace and justice.

Over recent years, increased enthusiasm for responsible investment has resulted in a greater awareness of the SDGs as investors seek to understand where their money is going and what good it is doing. They can provide a useful framework for thinking about responsible investment opportunities, but also have limitations.

Established in 2015, the SDGs are at the heart of the UN’s 2030 Agenda for Sustainable Development and act as a blueprint for achieving a better and more sustainable future for all. The 17 overarching goals, underpinned by 169 specific targets and 232 measurable indicators, form a globally agreed framework for realising real-world outcomes on key global issues – such as poverty, healthcare, gender equality and biodiversity – for society and all its stakeholders.

Although progress has been made in some regards since they were adopted, there is much more to be done if we are to achieve them by the deadline: the UN estimates that annual investments of between $5trn and $7trn is required to reach the goals in the next eight years.

The SDGs illustrate the responsible investment priorities for governments around the world, but they can also provide a framework for fund groups to identify responsible investment themes and opportunities that can help to solve the many and varied sustainability challenges. As the industry continues to evolve there have been a growing number of fund groups that are committed to aligning their investments and funds to the SDGs to demonstrate how they are contributing to the transition to a more sustainable economy.

But although the industry’s embrace of the SDGs is a positive step forward, investors should be cognisant of their limitations. Click here to read more about misuse, oversimplication and other limitations.

As the world of responsible investment continues to evolve, it is likely we will see a shift in focus from whether an investment aligns with the SDGs to defining measurable real-world outcomes and contributions.

A part of the Mark Allen Group.