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What are the SDGs? How can you invest with them in mind?

What are the SDGs? How can you invest with them in mind?

How well do you know the SDGs? Use this guide to learn more about them and how to invest with them in focus.

Jack Casady

ESG data
May 2, 2022

The Sustainable Development Goals (SDGs) were established in 2015 during the 2030 Agenda for Sustainable Development. The 17 goals, with 169 targets, provide a universal framework that all 163 member countries of the United Nations (UN) can work towards. The belief of the SDGs is that progress on one of the goals leads to benefits of other goals. The initial concept of the SDGs, however, goes back a bit farther to the 1970s, when the world realized the massive growth of the global economy could not continue to sustain a healthy planet and a plan had to be put in place to address that.

SDGs and MDGs: What are they, and how are they different?

https://sdgs.un.org/goals
Source: United Nations, 2019.

The SDGs, at their core, are a set of clear goals to help orient and unite global systems and individuals toward common issues and keep progress in a shared direction. Goal-based development is a powerful way to establish place markers of success within complex issues and there is a strong belief that defining clear steps to address these issues helps to propel progress and brings many people of different backgrounds and beliefs toward a common good and goal. In the case of the 17 SDGs, the world can have a shared future of sustainable development of shared prosperity, universal inclusion, and environmental sustainability. The concept of goal-oriented development is not a new concept however, prior to the SDGs, the Millennium Development Goals (MDGs) were started mainly to tackle issues of poverty, prevention of HIV/AIDS, and access to health services globally. Some aspects of the MDGs were successful, but the lack of monitoring, assessment, and issues of impact accountability lead to their transformation into the SDGs, where these issues were better addressed and accounted for. 

A brief history

Prior to the 1970s, the UN was focused primarily on global war and peace, decolonization, and issues regarding the Cold War. However, in 1972, the reality that the global economy could not continue to grow at its current rate while also maintaining a sustainable planet was now ever-present on the global stage. With the looming realization that something had to be done, the 1972 Stockholm conference established 26 principles of environmental sustainability to be universal global priorities moving forward. This was a new chapter for the UN, as it now established that global sustainability was to be a key focus for all member countries.

15 years later in 1987, Prime Minister of Norway, Gro Harlem Brundtland, and her committee established the report, Our Common Future, which outlined proposals for achieving sustainable development for the year 2000 and beyond. The report highlighted the need to address both environmental and social issues but also took into account that not all the 193 countries were at the same economic and social development stages, so objectives were established that would be mutually supportive of all member countries and be able to establish a long term agenda for action in the coming decades, to tackle large scale environmental issues would be key. The Brundtland Report also did not restrict the future to environmental issues. Brundtland wrote in the opening of the report that “the environment does not exist as a sphere separate from human actions, ambitions, and needs… But the “environment” is where we all live; and “development” is what we all do in attempting to improve our lot within that abode. The two are inseparable.” (Our Common Future, page 9) The notion that sustainable development is tackling both environmental and human issues started to take form in this 1987 report and both the cooperation of member states, and external groups would be what drive actionable change.

5 years after the Brundtland Report was published, the 1992 UN Conference on Environment and Development in Rio adopted 3 multilateral environmental conventions focused on climate change, biological diversity, and combating the spread of deserts in dryland regions. 

At the Rio+20 conference in 2012, named “The future we want,” the grim realization that the concept of sustainable development did not take hold at a global level, and the 3 agreements made in 1992 were not implemented, but the Millennium Development Goals (MDGs) mainly focused on combating poverty, HIV/ADs, and other more society centric goals were showing some promise. This realization that the MDG era had to be adapted to fit our growing environmental needs while also providing a strict framework and measurable success points would be the right path forward. 

In 2015, the 17 Sustainable Development Goals were established to act as a set of clear goals for all 193 member countries to work towards, and they tackled the most important and pressing issues we face for this generation and the next.

How does YourStake use the SDGs? 

The Brundtland Report of 1987 made it clear that counties could not make meaningful change on their own; action from NGOs, private companies, and individuals would be key in helping to propel Sustainable Development. These global goals have become a widely accepted framework that investors and business leaders have integrated as a blueprint to manage and measure positive social and environmental outcomes while also minimizing harm. 

YourStake can help align investment portfolios with each of the 17 SDGs. Our analysts reviewed the 169 targets across the SDGs to map metrics to the goal where the data collected in the metric corresponds with the targets.

Example for SDG 3: Good Health and Well Being

YourStake uses the following metrics to assess a portfolio’s alignment with SDG 3: Good Health and Well Being.

Values Screener that align to SDG 3. See more.

Each of the metrics above corresponds to a specific target within SDG 3, and helps give a full picture of investment outcome to measurable targets within each goal. This is key to measuring the specific impact of investments within a portfolio or company, as it leads to a deeper understanding of the actionable change they are creating, or illuminates shortcomings of progress.

YourStake helps investors assess the SDG alignment of a portfolio in comparison to a benchmark. A portfolio’s alignment with each SDG is calculated by taking the coverage-weighted average of the comparison between the portfolio and the benchmark for each metric mapped to the Goal.

For example, because Access to Medicine Score is only relevant to a small subset of companies (pharmaceutical companies), it will generally have a smaller contribution than broader-based metrics such as Toxic Air Pollution to a portfolio's alignment with SDG 3: Good Health and Well Being.

For change to be made globally, it takes all of us to help where we can, and investing in companies that help uplift others, make our planet safer to live in, and find companies that reflect client values is key to a better life for all.

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