CalPERS, the agency that manages California’s pension fund of public employees and their families, believes that the U.N. Sustainable Development Goals (SDGs) are "a gift to sustainability investors." The multibillion dollar pension fund isn’t alone in believing that sustainability is a profitable investment.
If we want to preserve this planet for future generations, something big must happen. In 2015, the United Nations agreed on 17 global goals that must be achieved by 2030 to shape a sustainable world. It was clear that the financing of the measures needed to achieve these goals cannot be achieved by public funds, donations or development aid alone.
Private money must be invested in projects that contribute to the achievement of the 17 goals. This requires a rethinking on the part of companies and project initiators, as well as institutional investors.
At SDG INVESTMENTS ®, we started to look around and dove deep into the world of sustainability, impact and social investment. We came into contact with several players and got to know the multiple challenges coming from many sides. There was a whole ecosystem that moved in different clusters and were seemingly loosely connected.
The measurement of sustainability
We consistently came across the problem of interpretation: What is sustainability? Who decides this? How do projects and investors fit together? What is their common denominator?
For us, the answer was obvious. For all those involved, it was the 17 sustainability goals set out by the United Nations. Finally, there was a globally accepted framework for categorizing the planet's biggest problems. It was a categorization agreed upon by all U.N. member states.
All you had to do was assign projects to those SDGs and ask investors to name their SDG investment focus. Already, the conditions were created to connect the relevant parties. So, the idea of ??the SDG INVESTMENTS platform was born.
We tested the idea with project initiators, investors and consultants and received much support. We were able to convey the concept of ??sustainability easily and concisely. The precise measurement of positive impact was not at all the problem for investors. They required only bold and transparent anecdotal proof. They wanted these stories from passionate entrepreneurs with new ideas and companies that contributed to sustainability for many years.
From sustainable startup to the SDG Fund
It also became clear that we would encounter different product categories and investor types within the platform. We got involved in the development of a sustainability guide for green startups and cooperate with the Federal Association of German Startups.
Within the platform, we provide information that allows business angels and venture capital investors to conduct efficient analysis of the business models of these startups.
In March 2018, we launched the platform with 10 projects with total funding of 124 million euros. By the end of April, the requested funding had increased to more than 400 million euros. We estimate the potential returns for investors could exceed 1 billion euros.
For us, it is no longer a question of whether, but when and how quickly institutional investors adopt sustainability in their investment processes. We find that more and more investors are using SDGs to fundamentally align their investment strategy.
Over the next few years, the SDG INVESTMENTS platform will help in the fulfillment of projects that fall within 17 SDGs. These projects include those in Asia, such as the construction of biogas plants in Shanghai and other major cities that convert food waste into energy and the installation of solar panels on church roofs across the Philippines.
