24 september 2018

Impact Investing & the UN Global Goals & Index Funds


Impact investing themes strongly resemble the 17 UN Global Goals or Sustainable Development Goals (SDG's), which are the successors to the Millennium Goals. The latter have contributed to decreasing extreme poverty, hunger, diseases & child mortality and gender inequality. Also to increased access to clean water & primary education, protection of the environment & biodiversity and global cooperation to achieve the goals.

We now have twice as many goals & themes: such as #SDG8: decent work & economic growth. So no growth with awful labor conditions and insufficient 'Living Wage'. #SDG9 is industry, innovation & infrastructure, for without technological progress the goals are unachievable.
#SDG10: Reduced Inequalities, next to #SDG5 Gender Equality, is aimed at inequality within countries (next to inequality between countries). Policies should pay attention to the needs of disadvantaged & marginalized populations. In impact investing jargon underserved communities whether they are ill, old, handicapped, poorly educated or people simply living in the wrong place or time.
The 2e Global Agenda has the crucial impact investing characteristic: private investors are called upon to invest too.
Investors have been asking for it for years and e.g. in largecaps, multinationals strategies the SDG's are becoming familiar drivers. For both daily operations in Environment, Social & Governance management and being proactive & Futureproof in planning for long term mega trends such as non renawable resources & human capital.
Impact investing & Sustainable Development Goals

In this upcoming posts I will look at SDG opportunities in :
(sub)sector(s) contribution to the SDG's as rated by Bob best-in-class & Materiality-of-Sustainability Eccles, based on SASB metrics (Sustainability Accounting Standards Board); 

Listed companies (stocks & bonds) in SDG sectors & themes (core activities, their ESG ratings (Yahoo Finance by Sustainalytics) & CSRHub ratings on Community, Employee, Environment & Governance & exclusion based on controversy rating;
Listed investment products in SDG sectors & themes :strategy, tactics & relevance;
Listed companies rated on Research, Development & Innovation RDI & investments, Mergers & Acquistion M&A in companies offering disruptive technological solutions for the SDG's:

ESG RESEARCH BUREAU'S & the SDGs
I'm hardly the first to look into the Global Goals' investment opportunities. Reputable raters & indexbuilders developed methodologies, indexes for ETP's, Notes & FundsThese indices & investment products are 100% transparant (with periodic changes).
MSCI, Risk & ESG rater, launched an index & Blackrock the iShares Global Impact ETF in 2016. MSCI organized the 17 SDGs in: Basic Needs, Natural Capital, Climate Change, Empowerment & Governance. The index holds 100 large & midcaps based on revenues (av. 75%) from SDG activitities.

ESG researcher VigeoEIRIS & indexbuilder Solactive created the Solactive Sustainable Development Goals World Index for the WorldBank with 50 largecaps (min. 20% revenues from SDG activitities) Borsa Italiana ISIN: XS1365236196

Wheb Investment analysed it's (2009) Sustainability Fund portfolio holdings on SDG's themes: whebgroup.com

INTERESTING LEADS, but unfortunately not accessible & affordable for me or very appealing, e.g. for lack of direct People Impact. So I will look for opportunities in the UN GlobalGoals one-on-one. For #SDG1 No Poverty I will focus on micro-, inclusive & meso finance. The latter are SME investments & the employment & economic growth accelerator (so also SDG8).
I'll also look into #fintech, finance innovation #SDG9. Micro or 'inclusive finance' is impact investings largest sector in AuM. It does not have a dedicated SDG, but all SDGs need access to finance & impact investments.

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