A new GIIN report reiterates the need for impact investors to raise and direct new capital to help meet the UN SDGs by 2030.
With an estimated $5-7 trillion needed annually to achieve the goals, it is clear that more capital — deployed by investors whose aims align with these goals — is an absolute requirement. The report, Financing the Sustainable Development Goals: Impact Investing in Action, released in advance of the agenda for the UN’s upcoming Global Goals Week (Sept. 22-29), showcases the potential for impact investing to catalyze progress towards these goals.
Through a series of case studies, the report illustrates the evolution of increasingly sophisticated and targeted approaches by impact investors directing capital towards the SDGs. From designing investment products around one or several SDGs to making the Goals a focus of their capital-raising, the investors in the GIIN report show how to proactively target and incorporate them throughout the investment cycle — including during sourcing and due diligence, investment selection and structuring, investment management and exits.
“The SDGs are an embodiment of the global agenda for development, and if we are to meet them by 2030, the collective effort of governments and private organizations needs to scale at a much faster pace. Despite some early progress, the need is more urgent than ever to inject new capital into high-impact businesses that address critical social and environmental challenges,” said GIIN CEO and co-founder Amit Bouri. “Through these case studies, we are highlighting investors and their strategic approaches to the SDGs, which we hope will inspire those in the investment community to consider how they too can take active roles in helping achieve these goals.”
The investors featured in the report, many of which target market rates of return, include:
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Blue Like an Orange Sustainable Capital, which operates a Latin America fund that targets SDGs focused on ending poverty and promoting good health, quality education, gender equality, sustainable communities and responsible consumption. Its mezzanine debt investments in Brazil, Chile, Colombia, Mexico and Peru bolster the unmet demand for loan capital from commercial banks in the region. The mezzanine debt segment provides flexibility for borrowers and attractive returns for investors.
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Incofin Investment Management, which operates private equity and debt funds focused on financial services and agriculture with a total of $1 billion under management. It incorporated the SDGs into its due diligence and investment management process across all its managed and advised funds and has made 60 investments globally that target market-rate returns while pursuing these aims.
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The Mirova Land Degradation Neutrality Fund project, launched in 2017, which specifically targets SDG 15 (Life on Land) — investing in projects that promote land degradation neutrality through, for example, reforestation and preventing desertification. Mirova has raised $120 million of a projected $300 million to provide long-term financing to investees in sustainable agriculture and forestry projects that demonstrate positive environmental and social practices.
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PGGM, a Netherlands-based asset manager for pension funds, which makes investments in food, health, water and climate, will invest 20 billion (US $22.6 billion) by 2020 to address SDGs focused on eliminating hunger and promoting good health, clean water and sanitation, clean energy and responsible consumption.
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Partners Group, an impact investor based in Switzerland, which launched the PG LIFE investment strategy this year, a private markets fund seeking market-rate financial returns alongside measurable progress towards ending poverty and promoting good health, quality education, and clean energy.
“What we see in these examples is a proactive, focused approach to the SDGs,” Bouri said. “It isn’t enough now to simply 'tag' relevant investments to SDG issue areas, although this is a good first step. What the world urgently needs is significantly more investment capital being channeled to these social and environmental priorities. The SDGs have been called ‘the world’s hardest to-do list,’ but with the help of leaders in the private capital markets, they may be achievable.”
Published Sep 10, 2018 2pm EDT / 11am PDT / 7pm BST / 8pm CEST