How the UN Sustainable Development Goals Impact Your ESG Investments

“Small acts, when multiplied by millions of people, can transform the world” — Howard Zinn

3 min read

How the UN Sustainable Development Goals Impact Your ESG Investments

“Small acts, when multiplied by millions of people, can transform the world” — Howard Zinn

3 min read

The United Nations’ Sustainable Development Goals (SDGs) are increasingly becoming a key framework for responsible investment around the globe.

In particular, the SDGs offer a comprehensive and universally accepted set of objectives that can guide investors and businesses in developing their Environmental, Social, and Governance (ESG) strategies.

What are the Sustainable Development Goals (SDGs)?

The SDGs are a set of 17 global objectives established by the UN in 2015 as part of the 2030 Agenda for Sustainable Development. They aim to address a wide range of global challenges, including poverty, inequality, climate change, environmental degradation, peace, and justice. These goals, agreed upon by all 193 Member States, call for active participation from businesses of all sizes in achieving these objectives.

To be exact, the 17 SDGs are:

No poverty
Zero hunger
Good health and wellbeing
Quality Education
Gender equality
Clean water and sanitation
Affordable and clean energy
Decent work and economic growth
Industry, innovation and infrastructure
Reduced inequalities
Sustainable cities and economies
Responsible consumption and production
Climate action
Life below water
Life on land
Peace, justice and strong institutions
Partnership for the goals

Integration of SDGs in ESG investing

In recent years, investors have been increasingly drawn to ESG strategies not only for their ethical implications but also for their potential to deliver long-term returns.

How then does this relate to the UN’s SDGs?

To keep up with the rising demand from investors exploring how to incorporate ESG strategies into their investment approach, many businesses have looked to expand upon their ESG practices and to provide more measurable targets.

The SDGs provide a broader, more comprehensive framework for ESG mapping, helping to drive the adoption of sustainable investing and responsible corporate behaviour.

Unlike traditional ESG approaches, which often focus on minimising negative impacts, the SDGs encourage businesses to make a proactive and measurable impact.

In turn, as of February 2018, more than 40% of the G250 — the world’s largest 250 companies — have acknowledged the SDGs in their corporate reporting.

Aligning ESG strategies with the SDGs

There are several advantages to aligning ESG strategies with the SDGs. These include:

Strengthened ESG Frameworks: The SDGs offer a new perspective on ESG issues, helping companies and investors establish a common language for decision-making. By connecting SDGs to existing ESG measures, businesses can address financially significant regulatory, operational, and ethical issues more effectively. This provides a clearer framework for assessing ESG criteria and informing an investor’s decision as to its suitability.
Improved Data Transparency: One of the main challenges in ESG investing is the lack of standardised data and transparency, ultimately leading to greater ‘greenwashing’ across companies. The SDGs, many of which are quantitative, require companies to gather and report measurable data, improving the quality of ESG disclosures and making it easier for investors to assess genuine sustainability performance.
Long-Term Value Creation: ESG-based investment decisions aim to create long-term value for both businesses and society, naturally aligning with the SDGs. In essence, the SDGs provide the “why,” while ESG provides the “how” — together, they offer a roadmap for sustainable and inclusive economic growth.

Why does this matter?

The SDGs present a unique opportunity for businesses and investors to make a meaningful impact on a measurable scale. The aim of aligning ESG practices with the SDGs can improve transparency and provide greater clarity when defining what it means to invest in ESG.

If you want to find out more about how you can incorporate the SDGs into your ESG investment approach get in touch with Patterson Mills today and book your initial, no-cost and no-obligation meeting to ensure you are making the right decisions for you.

Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Please note that all content within this article has been prepared for information purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.

Sustainable Investing: the What, the How, the Why

Sustainability is no longer about doing less harm. It’s about doing more good

Jochen Zeitz, President and CEO of Harley-Davidson Tweet

5 min read

Many people have heard of ESG-SRI, including sustainable and impact investing. These words may seemingly appear around every corner, in every questionnaire and are growing in popularity. So, what exactly is it all about?

The What

It is important to first understand what these terms actually mean:

“ESG” stands for Environmental, Social and Governance
“SRI” stands for Sustainable (or Socially) Responsible Investing
“Impact investing” seeks to make a positive impact on the World, as well as using ESG and SRI principles at all times

ESG integration as an investment tool is very different from sustainable investing. While some ESG factors do describe aspects of company sustainability, its aim is to unlock factors that solely impact financial performance. For example, an excellent ESG integrated strategy may still invest in sectors that could be considered unsustainable – like tobacco manufacturers or fossil fuel extractors.

A potential issue, and definitely something to look out for, is ‘greenwashing’. This is where a company is making false claims about a product that purports to be environmentally conscious but is not actually making any notable efforts for sustainability at all. To avoid this, seek companies that display their sustainability ‘credentials’ in a clear and easy to understand manner, with no misleading messaging or imagery, backed up by data and compared to a suitable benchmark.

The How

ESG investing has three criteria:

Environmental impact
Social impact
Governance

The environmental aspect looks at how a company impacts the planet by asking what a company does to reduce its harmful environmental footprint, utilise renewable resources and energy, and how it incentivises its employees to reduce their own footprint.

The social aspect questions how a company treats its employees, customers, suppliers, and the local community. This will analyse healthcare policies, compensation, employee working conditions, discrimination and more.

Governance relates to information about a company’s board of directors, business ethics and structure. Specifically, voting practices, independence, diversity, how new members are selected, how the company trades, levels of transparency, and so on.

Impact Investing seeks to make a positive impact by investing in companies whose products and services create positive impacts rather than just avoiding a negative impact. Impact investing also adds another element: the ability to measure the (global) effect of the investment.

This usually means that Impact Investors are more focused on creating a measurable impact on the World, even if it means foregoing a larger financial return possible elsewhere. It should be noted however that a lower financial return is far from being the norm nowadays from an Impact portfolio.

A lesser-known facet of ESG investing is to look for companies that are B-Lab certified as a B-Corp. B Lab creates standards, policies, tools, and programs that shift the behaviour, culture, and structural underpinnings of capitalism. Discover more about B-Lab’s work as a non-profit here.

The Why

There are clear reasons for the rise of ESG investing. Volatility in this sector has seen a great decline for investors over the last 5 or 6 years and it is now possible to obtain enhanced returns with reduced volatility risk in some cases. This is making ESG investments highly attractive as this sector develops further.

In addition, consumers and investors are holding companies accountable for their impact on environmental, social and governance factors against relevant benchmarks. This leads to the decision that a more ESG oriented company may deserve your money over a less ESG oriented company.

A record $649 billion poured into ESG-focused funds worldwide up to 30^th November 2021. This was up from $542 billion in 2020 and $285 billion in 2019, making a 127% annual increase over just two years! In December 2021, Morningstar Direct estimated that global sustainable fund assets reached $2.7 trillion.

Sustainably Investing for the Future

ESG and Impact Investing should not be only for a select few. At Patterson-Mills, we believe in investing for a better future and making it accessible for all. To accomplish this, we offer tailored solutions from a carefully selective range of funds, fund managers, with rigorous analysis of appropriate criteria. Following an initial no-obligation meeting, we create a bespoke recommendation for our clients so as to successfully achieve their investment objectives.

Whether our clients wish to invest 100% of their available capital into ESG, SRI and Impact Investing fund styles, or maybe 25%, or perhaps initially none at all, we have a suitable offering available. However, the key is to be put into a position to make a fully informed choice, which at Patterson-Mills, we show all prospective clients.

Our interests and those of our clients are one and the same, and so we only use proven, cost-effective, and tailored solutions in order to produce the most positive outcomes for our clients’ financial objectives.

Get in touch today and book your free no-obligation review meeting. You have nothing to lose and potentially lots to gain!

Send us an e-mail to edward@pattersonmills.ch, call us direct at +41 78 214 84 32, or fill in our contact form below.

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