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How Investors Can Help Meet UN Sustainable Development Goals

Two ways the investment community can make the biggest impact towards meeting the Sustainable Development Goals.

We recently had the privilege of participating in the 2017 United Nations Private Sector Forum and CEO Roundtable, organized around the theme of “Financing the 2030 Agenda: Unlocking Prosperity.” It was eye-opening to hear examples of how business leaders are using private capital, innovation and expertise to meet the UN Sustainable Development Goals (SDGs) – and to share our own thoughts on what the investment community can do.

Private capital and the SDGs

The SDGs are a set of 17 goals adopted by world leaders in 2015, designed to end poverty, protect the planet and ensure prosperity for all. Despite the ambitious nature of the SDGs, many private businesses are already contributing to their achievement, motivated by a variety of factors.

In many cases, enlightened economic self-interest is guiding businesses to solve long-standing social and sustainability problems in new ways. In others, SDG achievement stems from businesses looking to mitigate medium- or long-term risks. In yet others, a critical assessment of social and economic risks emerging from the status quo is motivating companies to make progress.

Whatever the motivation, the role of the private sector is critical, as the resources needed to meet the SDGs are enormous – $5 trillion to $7 trillion annually, according to UN estimates. While much of the funding will come from official government aid, the private sector will need to contribute not just through public-private partnerships and providing capital to meet the SDG objectives, but through developing innovative solutions to fill critical gaps the public sector has trouble addressing.

The role of the investment community

The investment community has an especially important role in this, and we believe it can make the biggest impact today in two ways:

  1. Collaborating to develop common standards for SDG-related disclosures; and
  2. Leveraging existing fixed income technology to direct capital toward impact goals.

Common disclosure standards

Speaking a common language among finance professionals with respect to SDG and, more broadly, Environmental, Social and Governance (ESG) initiatives can accelerate focus and accountability. It will also allow consumers of financial services as well as business products and services to make more informed decisions. Understandably this will require a significant shift in market practice, but getting it right could unleash large amounts of liquid capital to support sustainable, inclusive growth and better standards of living across the globe.

Leveraging existing fixed income technology

Developing financial instruments that directly target positive impact will also be critical. However, large amounts of capital will only be deployed if such securities are competitive and come with the right profit incentives.

At PIMCO, we believe that securities can be created to target a range of impact outcomes based on the SDGs, without compromising on investment return potential, and in some cases even enhancing it. We are excited to be collaborating with the UN Global Compact, the UN PRI (Principles for Responsible Investment) and a host of issuers to usher in a new era of “impact bonds.” We are also engaging with issuers to encourage them to map revenues to SDGs as well as to report more broadly on SDG progress.

During our visit to the UN, we were pleased to hear how many businesses, all using private capital, innovation and foresight, are providing ground-breaking solutions to help meet the SDGs – and we firmly believe that the investment community can take this further. Identifying capital deployed toward meeting the goals and establishing a credible system to measure both profits and achievements on SDGs have the potential to unlock the tremendous amounts of liquid capital needed to make an impact.

Learn more about PIMCO’s sustainability initiative, which is dedicated to firmwide integration of ESG (environmental, social and governance) principles. Our investment process emphasizes careful analysis of the broad secular trends at the core of long-term sustainability.

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The Author

Scott A. Mather

CIO U.S. Core Strategies

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London
PIMCO Europe Ltd
11 Baker Street
London W1U 3AH, England
+44 (0) 20 3640 1000

Dublin
PIMCO Europe GmbH Irish Branch,
PIMCO Global Advisors (Ireland)
Limited
3rd Floor, Harcourt Building 57B Harcourt Street
Dublin D02 F721, Ireland
+353 (0) 1592 2000

Munich
PIMCO Europe GmbH
Seidlstraße 24-24a
80335 Munich, Germany
+49 (0) 89 26209 6000

Milan
PIMCO Europe GmbH - Italy
Corso Matteotti 8
20121 Milan, Italy
+39 02 9475 5400

Zurich
PIMCO (Schweiz) GmbH
Brandschenkestrasse 41
8002 Zurich, Switzerland
Tel: + 41 44 512 49 10

PIMCO Europe Ltd (Company No. 2604517) is authorised and regulated by the Financial Conduct Authority (12 Endeavour Square, London E20 1JN) in the UK. The services provided by PIMCO Europe Ltd are not available to retail investors, who should not rely on this communication but contact their financial adviser. PIMCO Europe GmbH (Company No. 192083, Seidlstr. 24-24a, 80335 Munich, Germany), PIMCO Europe GmbH Italian Branch (Company No. 10005170963), PIMCO Europe GmbH Irish Branch (Company No. 909462), PIMCO Europe GmbH UK Branch (Company No. BR022803) and PIMCO Europe GmbH Spanish Branch (N.I.F. W2765338E) are authorised and regulated by the German Federal Financial Supervisory Authority (BaFin) (Marie- Curie-Str. 24-28, 60439 Frankfurt am Main) in Germany in accordance with Section 32 of the German Banking Act (KWG). The Italian Branch, Irish Branch, UK Branch and Spanish Branch are additionally supervised by: (1) Italian Branch: the Commissione Nazionale per le Società e la Borsa (CONSOB) in accordance with Article 27 of the Italian Consolidated Financial Act; (2) Irish Branch: the Central Bank of Ireland in accordance with Regulation 43 of the European Union (Markets in Financial Instruments) Regulations 2017, as amended; (3) UK Branch: the Financial Conduct Authority; and (4) Spanish Branch: the Comisión Nacional del Mercado de Valores (CNMV) in accordance with obligations stipulated in articles 168 and 203 to 224, as well as obligations contained in Tile V, Section I of the Law on the Securities Market (LSM) and in articles 111, 114 and 117 of Royal Decree 217/2008, respectively. The services provided by PIMCO Europe GmbH are available only to professional clients as defined in Section 67 para. 2 German Securities Trading Act (WpHG). They are not available to individual investors, who should not rely on this communication.| PIMCO (Schweiz) GmbH (registered in Switzerland, Company No. CH-020.4.038.582-2) . The services provided by PIMCO (Schweiz) GmbH are not available to retail investors, who should not rely on this communication but contact their financial adviser.

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