The Sustainable Development Investments Asset Owner Platform (SDI AOP) and financial intelligence group Qontigo have launched the SDI Dashboard, which allows investors to upload their investment portfolios and analyse them across a range of SDG-related parameters.
- While climate change is dominating the risk discourse, there is increasing demand for the understanding of investment impact across the Sustainable Development Goals (SDGs).
- While there are challenges in integrating the SDGs into investment approaches, they are relatively familiar terms for many investors.
- SDI AOP’s new tool is intended to assess businesses’ revenue streams based on their contribution to the SDGs.
Over the years, there has been an increasing appetite for investing in the UN SDGs, but the lack of quality data to identify company contributions has been a challenge for companies and investors alike.
How can investors measure their SDG impact?
Investors face challenges such as understanding financial materiality, sourcing suitable datasets to fulfil sustainable objectives, decomposing risk and impact while measuring the progress of outcomes, and ultimately translating SDGs and other sustainable investment frameworks into a common vernacular that global investors can understand and leverage.
While there are challenges in integrating the SDGs into investment approaches, they are relatively familiar terms for many investors. The 17 SDGs, which include eradicating hunger and poverty, and promoting good health and well-being, were introduced in 2015 and are helping investors guide their investment policies.
At a February 2023 webinar, a panel of asset owners said that integrating the SDGs into investment portfolios is becoming both a prerequisite and a medium for responsible investors. “We like to take a holistic approach to sustainability and not focus on a more narrow area such as climate or green investments,” said Sandra Metoyer, head of sustainable investments at Velliv, which provides pension solutions to more than 390,000 Danes. “We feel that the SDGs cover the whole spectrum when speaking sustainability, when speaking climate, when speaking society, and how investments affect us humans.”
What is the SDI AOP?
Four of the world’s largest asset owners of the SDI AOP have come together to develop a new tool to assess businesses’ revenue streams based on their contribution to the SDGs.
Made up of APG, AustralianSuper, British Columbia Investment Management Corporation and PGGM, the SDI AOP is an asset owner-led platform committed to accelerating the market adoption of Sustainable Development Investments (SDIs). The SDI AOP Design Authority establishes and maintains a taxonomy of solutions that contribute to the SDGs and decides on the rules for identifying SDIs.
The SDI AOP was launched in 2020 to work with investors to embed the UN SDGs into their investment processes and integrate SDG contributions into their portfolio management and reporting, enabling target setting and progress monitoring. The SDI AOP data universe currently comprises more than 9,000 companies which are classified according to their product and service-related revenue contributions to the SDGs. With the new dashboard, relevant sustainability information can be used for portfolio management, research, monitoring, internal communication and client reporting.
How does the new tool work?
The dashboard provides a number of insights, providing information across multiple use cases. For example, a portfolio overview, designed for overall SDI monitoring and client reporting, includes breakdowns by SDI status as well as positive and negative revenue contributions. These can be further broken down by categories such as sectors or industry groups.
Other dashboards, designed to support research and portfolio management, enable further SDI analysis relative to the client’s chosen benchmark and allow clients to identify top positive and negative SDI holdings. Users can view the data onscreen and also generate PDF reports.
The system has been designed to allow investors to easily assess their portfolios against any selected sustainability criteria. James Leaton, research director at SDI AOP, said: “Multiple portfolios can be uploaded using Qontigo’s cloud-based platform. The individual instruments are then mapped to our SDI universe and an aggregated portfolio view as well as various drill-down views are made available.”