Why It's Time for Institutional Investors to Embrace SDG-Aligned Investing

Sustainable investment has been attracting increased attention by institutional and individual investors for more than two decades. This is reflected in the more than 3,000 signatories to the UN Principles for Responsible Investment (UNPRI) from 60 countries and representing USD 103.4 trillion in assets under management as of 2020. However, although these efforts may have created a positive impact on investors’ portfolios with higher risk-adjusted returns, they have fallen short of achieving positive people and planet outcomes, as articulated by the United Nations Sustainable Development Goals (SDGs). This contradiction and lack of progress should be very concerning for institutional investors that have expressed their commitment to sustainability. The fact that investors’ actions are not translating into clear positive people and planet outcomes, and reducing negative impacts and externalities, is undermining the credibility of the investment community’s efforts around sustainability. What is more, by not focusing on supporting our shared social and environmental systems, investors are weakening their ability to guarantee lasting returns for their clients and beneficiaries. So, what can investors do to contribute to the achievement of the SDGs and, by doing so, support the shared social and environmental systems that will fuel long-term investment opportunities? To answer this question, Beyond Alpha interviewed more than 40 investment managers, asset owners, and thought leaders, globally, and gathered input from extensive secondary research, over a 12-month period. This presentation will discuss the findings of this study and will offer a different investment approach and set the tools for institutional investors to meaningfully contribute to the SDGs.