Despite being a growing reservoir of funds under management, this critically important pool of capital is confronting mounting problems collating and disseminating key data in a timely manner.
The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
How ‘sustainable development goals’ are framing investing
The next big challenge for investors in the integration of ESG factors in their investment processes is the alignment of the 17 ‘sustainable development goals’ (SDGs) with their own investment objectives. According to index provider S&P Dow Jones, the SDGs are framing the global agenda of sustainable development.
In a paper published by S&P the researchers provide a comprehensive update on the world of ESG, as it is unfolding across the broad investment community globally.
Written by a team led by Martina Macpherson, global head of S&P’s ESG Indices, Product Management, and a lecturer at the University of Zurich, the paper says: “There is still considerable progress to be made in breaking down the 17 SDGs, 169 targets, and 232 indicators into more standardized and, therefore, meaningful metrics for companies and investors to use- underpinned by measurable data.
“However, cross-border alignment of multi-stakeholder initiatives has set the scene for a new paradigm, especially in the context of development finance and the Addis Ababa Action Agenda (2015) to finance the SDG Agenda,” she says.
“New regulation, such as the EU Directive 2014/95 on “Disclosure of Non-Financial Information, stock exchanges’ ESG listing requirements, and integrated reporting frameworks are playing a pivotal role in supporting this harmonization effort.
“Importantly, impact reporting initiatives and frameworks have started to use the SDGs as a lens-for example, the Global Impact Investing Network (GIIN, 2016), U.N. Global Compact, WBCSD, and Global Reporting Initiative (2016) have jointly released SDG-related guidance for businesses. There is also considerable work in the pipeline from the ‘Natural Capital Coalition’ related to its new protocol.
“This alignment across sustainability frameworks is paving the way for a holistic “systems” approach and “universal agenda”, as called for in the UN’s SDG Synthesis Report (2015), to bring positive action on all of the 17 SDGs and opportunities for investors and businesses at the board level, as well as within the C-suite and middle management.
“Last but not least, we will not achieve SDG 16 and 17 without leaders across the investment value chain. That makes leadership itself a crucial, and deeply interconnected, element of the 2030 Agenda.”
