The United Nations Development Programme (UNDP) released on Wednesday for comment and consultation a new set of standards to guide private fund managers toward investments that advance the Sustainable Development Goals (SDGs).
These SDG Impact Practice Standards for Private Equity Funds were developed by SDG Impact, a flagship UNDP initiative aimed at advancing transparency and mobilizing private capital in support of sustainable, climate-friendly growth.
"Private-sector enthusiasm for the SDGs is strong and growing, but translating interest into action has been challenging," SDG Impact Director Elizabeth Boggs-Davidsen said.
"A big part of the SDG story is scale. We need to significantly speed up implementation to make progress by the goals' target date of 2030. Mobilizing an additional 5 percent of global assets under management yearly (about 6 trillion U.S. dollars) in ways that take us closer to the SDGs is a realistic goal. SDG Impact is focused on best practices to inform goal-setting, data collection, and impact management and measurement."
The UNDP Practice Standards for Private Equity provide practical guideposts that make it easier for the private sector to operationalize the SDGs and shorten the runway from interest in to adoption of good impact practice. UNDP Practice Standards for Bonds and Enterprises will follow.
The Standards facilitate implementation of principles already in place and inform performance reporting and benchmarking. They are designed to be useful for the broader market, informing the questions to ask to make assessments of good practice and recognize the growing trend towards analyzing businesses and investments based on the SDGs.
"There's a concrete value proposition here," Boggs-Davidsen said, adding that "the evidence is in-companies that embed strong sustainability practices significantly outperform their counterparts over the long-term."
The standards respond to a market-led acknowledgement that more is required beyond reporting on current activities. Impact measurement and management must be embedded in the investment life-cycle to bring stakeholder perspectives to the table.
To recognize and encourage good practice, the UNDP Standards include a tiered certification framework to acknowledge and differentiate good practice in the market, with an SDG Impact Seal that would be awarded based on compliance with certification criteria.
SDG Impact is a UNDP initiative focused on eliminating barriers and driving integrity for SDG-enabling investment at scale.
SDG Impact has three pillars, namely, Impact Management: Practice standards that clarify what SDG-enabling investment is and provide tools to support investor and business contributions to the SDGs; Impact Intelligence, country-level data that provide insights into SDG-enabling investment opportunities, highlighting areas where development need, political and policy priority, and investor appetite and activity coalesce; and Impact Facilitation, a network that spans 170 countries to connect investors, businesses, and policy-makers to provide insight and tools that translate opportunities into action and facilitate rich policy dialogue.