Guest blog post from Scott Sacknoff of Serenity Shares Investments
Most people would be surprised using the terms “United Nations” and “viral marketing” in the same sentence, but that is essentially what is happening with the UN Sustainable Development Goals—otherwise known as their 17 “SDGs”. It’s a term gaining increasing attention from companies and investors around the globe.
What are the UN SDGs and why should I pay attention?
Background: In 2015, the UN issued a report that identified 17 key challenges to society and the planet. Broad and audacious themes like eliminating poverty, achieving gender equality and social justice for all—as well as environmental themes related to protecting the land, water, and the environment. Ultimately 193 nations signed on… one of the few examples when all member nations agreed on something.
From a policy perspective, the UN hoped institutions (charitable, government, and private investors) would cite the SDGs when investing or issuing grants so they could track how much was being spent, what it was being spent on, and how much was needed to accomplish these goals (later estimated to be $5-7 trillion).
What evolved was something they didn’t expect. The infographic the UN developed was visual and easy to understand—17 boxes, each with a number and a very simple identifiable icon. Financial institutions, including many European pension funds, started to use the SDGs to document their efforts toward addressing board mandates stating they should invest not only to meet pension plan needs but to improve the world in which their retirees live. Companies (public and private) soon followed, recognizing the positive publicity they could receive by highlighting how their firm’s activities were targeting the SDGs. Although in some cases these claims could be described as “greenwashing,” meaning they are more PR spin than real progress.
Using the SDGs as an investment thesis
There are many definitions and methodologies to define the issues affecting society and the planet, but the SDGs provide a simple, effective way of communicating and tracking efforts. Naturally, investment products were soon to follow, but from a public equity fund standpoint, how does one identify firms targeting, for example, the elimination of global poverty, SDG #1? Or #16, “Peace Justice, and Strong Institutions?”
My firm, SerenityShares Investments, chose to develop a methodology that identifies publicly-listed companies whose products or services target one of 20 societal and environmental challenges that have the potential to make a positive impact on society. Aligned with the SDGs, these activities range from renewal energy and recycling to eldercare and healthy, natural foods.
SerenityShares is not alone in offering a strategy targeting the SDGs. Over the past several months several firms/funds have entered the market to target specific SDGs. Ultimately, when it comes to choosing a provider, the devil is in the details, and one should carefully read the prospectus or available literature to determine if the strategy is aligned with your interests and beliefs and meets your financial goals.
While the SDGs may not be perfect, they have become an increasingly powerful tool for government, nonprofits, and the investment community to convey how they are working toward improving society and the world around us.