This week marks five years since the United Nations agreed the Sustainable Development Goals (SDGs). A series of 17 social and environmental goals, comprising 169 targets, the SDGs succeeded the Millennium Development Goals, but unlike their developing-country targeted predecessors, are more universally applicable.

Five years into their 15-year lifespan, the SDGs have been successful in galvanising action, focusing attention, and providing a globally-recognised framework for organisations of all types to measure their progress against the goals. They provide guidance and direction to what sustainable development challenges are and what is required to achieve a transition to a more sustainable economy. Crucially, investors are increasingly interested in understanding the extent to which their investments are contributing to the attainment of the SDGs.

However, they have certainly had their shortcomings and challenges. The large number of targets, and the fact that some of them are aimed at government and public sector actors rather than private sector companies, has made it challenging to quantify the extent to which an investment in a portfolio of companies is really contributing to meeting the SDGs. Moreover, the general, high-level and overlapping nature of the goals has led to huge ambiguity and a lack of consensus or standardisation around measurement. Criticisms of “rainbow washing” have been levelled, and in many cases, with some justification.

This week also marks the publication of Impact @ Impax 2020. The report discloses the quantified environmental benefits linked to our clients’ investments in our portfolio companies, including impacts covering carbon emissions avoided, renewable energy generated, water treated, saved or provided, materials recovered and waste treated, and coal use displaced in Asian cities.

Since our foundation in 1998, Impax has been intentionally directing funds towards areas of the market that are providing solutions to sustainability challenges, demonstrating that these can be sound investments and thus lowering the cost of capital for companies delivering a positive impact through their environmental products and services.

Every strategy at Impax is designed to intentionally allocate clients’ capital towards those companies we expect to flourish as the global economy transitions to a more sustainable model, and to reduce or eliminate exposure to potential losers from that transition.

Our Impact report provides post-investment evidence of this intentionality. And for the last four years we have mapped our strategies against the SDGs, to show how they align to relevant goals when considering revenue exposure to related activities.

In the absence of agreed and recognised SDG measuring and reporting standards, we purposefully take a conservative approach, where revenues from companies’ products and services only are mapped to the most relevant SDG and the mapping methodology and approach is clearly described. We also only map revenues to SDGs that are implementable by the private sector and seek guidance from the sub-targets where the SDGs are mainly intended geographically as priorities (i.e. Least Developed Countries only or global/universal).

The measurement of impact is an evolving discipline, with a proliferation of methodologies and techniques, and none of the consistency that regulation and international standardisation has brought to financial accounting.
This is certainly the case when it comes to using the SDGs. While they have raised awareness, actual achievements are still lagging, and the UN has judged that, a third of the way to the 2030 deadline, the world is not on track to achieve the UN SDGs. At the start of what the UN has called the “Decade of Action” to meet the SDGs, UN Secretary-General António Guterres has called for “renewed ambition, mobilisation, leadership and collective action” as part of a global effort to meet the goals and in response to the Covid-19 pandemic.

“Building back better” in the wake of the pandemic is likely to be a central preoccupation of policymakers in the months and years to come. Time will tell the extent to which sustainability considerations are successfully incorporated into pandemic recovery programmes, and what role the SDGs will play.

To read the Impact @ Impax 2020 report, click here

Lisa Beauvilain

Head of Sustainability & ESG, Executive Director

Lisa is responsible for the development and oversight of Impax’s Sustainability and Environmental, Social and Governance (ESG) analysis, including overseeing stewardship work in the Listed Equity team. She is the Chair of Impax’s ESG, Sustainability Lens and Environmental Committees and also Co-Heads Impax’s impact investment work.

Lisa joined Impax in 2010. She started working in the financial industry in 1999 and previously worked as an executive director in the Investment Management Division of Goldman Sachs in London. Lisa has also worked as an independent consultant, focusing on environmental policy research and analysis.

She is active within working groups and advisory councils relating to impact investing, water, governance and ESG standard setting with several external industry organisations.

Lisa has an MSc in Environment and Development from the London School of Economics as well as an MSc in Finance from the Hanken School of Economics, Finland.

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