Managing Impact Using the Sustainable Development Goals

The 17 Sustainable Development Goals developed by the United Nations

Built on the successes of the Millennium Development Goals (MDGs) that spanned from 2000 to 2015, the Sustainable Development Goals (SDGs) were adopted at a United Nations Summit in New York City in September 2015. The 17 SDGs were positioned as positive outcomes for both people and the planet that countered pressing global challenges, including issues such as poverty (Goal 1), gender equality (Goal 5), and climate change (Goal 13). As a global call to action, these goal serve to provide a framework that encourages prosperity and development while ultimately protecting the planet’s resources.

The daunting task to achieve the 17 SDGs by 2030 is estimated by the United Nations to cost $5 – $7 trillion USD. Thus, mobilization of capital and financing of sustainable development strategies involves all major stakeholders: governments, civil society, the private sector, and others are expected to contribute to the realization of these goals.

Certain governments have taken this in full stride by intentionally directing funds and building strategy to support sustainable development. In Canada, the Federal Sustainable Development Strategy was developed in 2016 by the Minister of Environment and Climate Change. It includes 13 goals, broken down into short-term milestones, that are aligned with the environmentally-focused SDGs. These goals are updated every 3 years to reflect the progress made towards achieving the SDGs; a progress report on the 2016–2019 Strategy was published in 2018.

An example of these goals is “Clean Growth,” which outlines the amount of investment made into the clean technology industry by the Canadian federal government. To help accelerate clean energy technology innovation, a short-term milestone was to double federal funding for clean energy research, development, and demonstrations from 387 million CAD in 2014–15 to 775 million CAD by 2020. The graph below shows the funding allocation breakdown across sectors within clean energy, starting with the year of 2014–2015 as the baseline.

The Government of Canada has taken further steps to incorporate the SDGs by allocating $49.4 million CAD over 13 years to establish an SDG Unit. As of 2018, this Unit is responsible for coordinating, monitoring, and reporting on Canadian activities to advance the SDGs both domestically and internationally. Additionally, up to $59.8 million CAD over 13 years starting in 2018 was allocated in the 2018 Federal Budget to provide existing departmental resources with programming to support the implementation of SDGs in Canada.

While the Canadian government publishes reports to offer insight into the steps that they have taken towards managing the impact of their activities in accordance with the SDGs, it is a bit more difficult to elucidate precisely how private capital is furthering the SDGs. As of recent years, there has been a greater societal shift towards conscious consumption, whether that be purchasing clothing made from recycled materials, the introduction of the Beyond Meat breakfast sausage at Tim Horton’s, or the increase in divestment from fossil fuels to invest in green bonds instead.

For a society to achieve the SDGs by 2030, these are important choices for the everyday consumer to engage in. However, there is tremendous opportunity (and responsibility) for investors to support the SDGs by deploying increasing amounts of capital to high-impact projects that address these critical societal challenges.

Financial products exist that proactively target and incorporate the SDGs at various stages of the investment cycle, such as investment selection based on SDG targets, the creation of impact management plans with portfolio companies, and reporting progress made towards the SDGs upon exit. Currently on the SVX platform is Deetken Impact’s Ilu Women’s Empowerment Fund. This Fund invests in small and medium-sized enterprises in Latin America and the Caribbean that have women in leadership and governance positions, and are in the renewable energy, health care, or energy efficiency sectors.

Deetken evaluates and reports on the contribution of the financial products it offers and portfolio companies to furthering the SDGs; a detailed breakdown of this is available on the Our Impact page of their website. Currently, Deetken is working towards the following SDGs:

Goal 3: Good Health
Goal 4: Quality Education
Goal 5: Gender Equality
Goal 7: Clean Energy
Goal 8: Good Jobs and Economic Growth

By providing measurable, up-to-date metrics that demonstrate their activities in furthering the SDGs, Deetken’s investors are able to track the social and environmental impact of their dollars in accordance with specific SDGs.

An impact investment firm in the Canadian Ecosystem that works in strong alignment with the SDGs is Rhiza Capital. Based in Vancouver, Rhiza invests in Canadian ventures that generate beneficial social or environmental impact alongside financial return. Like Deetken Impact, Rhiza uses the SDGs as a framework for measuring and reporting the impact generated by their investments into their portfolio companies. Currently, the largest majority of their portfolio companies are working towards:

Goal 3: Good Health and Well-being
Goal 8: Decent Work and Economic Growth
Goal 9: Industry, Innovation, and Infrastructure

More information on their impact management using SDGs is on the Impact page of their website.

The importance of the SDGs is evident by the way that they bring a cohesiveness and comparative ability to impact reporting. Impact towards these goals can be achieved by numerous contributors in society, and the SDG framework can be used universally to unify measurement and reporting from every activity. This means that progress made towards the goals by the Canadian ventures that Rhiza invests in, by Deetken’s fund that empowers women in Latin America and the Caribbean, and the various efforts by the Government of Canada can all be evaluated on the same scale.

From governments to civil society organizations, everyday consumers to private sector investors, the SDGs enable us to speak the same language, when it comes to understanding, evaluating, and reporting our activities as we advance towards a more sustainable world.

Standard Disclaimer: This is for information purposes only and is not meant to be a recommendation for any investments referred to in the blog. This is not a complete investment summary. Investors should read all associated documentation including the investor package and associated securities agreements before considering or making any investment.

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