Beyond Alignment: Contributing to the Sustainable Development Goals

As investors, both institutional and individual, look for ways to use their money in a more impactful way, the United Nations’ Sustainable Development Goals (SDGs) have emerged as a relatable tool. However, Raymond Jacobs and John Levy from Franklin Real Asset Advisors warn the SDGs are vulnerable to misuse, misrepresentation and dilution. In this article, they explain why impact investment products labeled as “aligned with the SDGs” should move beyond just alignment and make a real contribution to positive social and environmental outcomes.

Understanding the impact that our money has on the planet and society is critically important for the investment world.

For many investors, the United Nations’ Sustainable Development Goals (SDGs) act as a common language for discussing, managing and reporting on impact investment strategies.

In fact, one of the most common questions from investors to asset managers in the impact investing space is: “are you aligned with the Sustainable Development Goals?”

Investors, whether motivated by internal reporting requirements, portfolio construction considerations or external client pressures, feel the need to know the SDGs addressed in each investment.

However, if we end the discussion at SDG alignment, there’s a risk that these incredibly important ambitions will be met in name only and will lack substance and depth.

We see it as our duty to raise the level of discussion and focus on how we achieve new and better results. We believe the focus on defining and measuring real contributions should be a primary consideration when assessing an impact strategy.