Study points huge lack of SDGs-linked investments

On the 11/10/20 at 12:54PM


Adrien Paredes-Vanheule

Sustainable development goals are not relevant to mainstream investment for a majority of asset managers surveyed by Standard Chartered.

One would think Asia or Africa would benefit the most from investments linked to the United Nations’ 17 sustainable development goals. But it seems Europe seems to top other regions in that field, followed by North America, according to a research released on Monday by Standard Chartered. Through its $50 Trillion Question, the financial group surveyed fund managers, strategists, emerging markets specialists of firms ranking among the world’s top 300 asset management companies with combined assets of over $50trn about their SDGs investment practices during last summer.

The study demonstrates that ESG-friendly asset managers are not necessarily SDG-friendly. The study indeed points out a clear lack of investments linked to the various targets set in the UN SDGs, putting at risk the 2030 deadline by which these targets are meant to be met. Only 13% of the assets managed by the survey respondents are identified as SDG-linked investments. More than this, 20% of the asset managers sounded out claimed they were unaware of the SDGs while 66% acknowledged they do not make investments contributing to SDGs.

Looking at the main barriers to benchmarking investments against the SDGs, a short majority of respondents (55%) said the SDGs were not relevant to mainstream investment. Some 47% respondents said investments in SDGs were too difficult to measure and that SDGs were not relevant to how they assess their investments. Still, half of the respondents answered they plan to start measuring investments against SDGs but had not achieved that yet.

Regulation that fosters SDG-linked products came as first answer (74%) to the question on tools and incentives to encourage SDG investment. Favourable tax treatment and evidence that SDG investments do not lead to outperformance were cited by 63% of the respondents. Also, 53% of the asset managers surveyed said better data to measure SDG investments’ impact and retail investor demand for such investments are needed.

Simon Cooper, CEO, corporate, commercial and institutional banking, Standard Chartered said, “Much progress has been made in recent years to realise the SDGs, but this study makes clear the need to move faster. A seismic, unprecedented surge in private-sector investment – alongside public investment and commitments – will be required to bridge the gap and hit the 2030 SDG targets.”