Impact Investors Are Setting the Tone for Aligning With the SDGs

Earlier this fall we talked about the Sustainable Development Goals (SDGs)—a collective action agenda that offers a coordinated approach to ending global poverty. We were particularly inspired by the strong examples of SDGs providing a unifying framework for corporations to double-down on integrating impact. But corporations are not the only group of actors finding alignment across the SDGs. Some impact investors—a community that continues to grow in size and scope—are already there.

Since the SDGs were formalized in 2015, we’ve seen impact investors reframe their thinking across both measurement and the development of new products. And the data supports this with the latest Global Impact Investing Network (GIIN) Annual Survey reporting 26 percent of the investors surveyed already track performance of their investments to the SDGs. An additional 34 percent plan to do so in the future—this will represent more than half of the active respondents already engaged in Impact Investing. Of the respondents who participated, many cited easier communication of impact (78 percent) and alignment with global development structures (75 percent) as key strengths of using SDG-aligned language.

Advancements in Standards and Frameworks

Standardization around how we invest in—and measure—the SDGs will be critical to truly meeting the Goals. Establishing a coherent set of frameworks that guide investors on “how” will also help us speak the same language. This year alone we’ve seen a thoughtful emergence of some of these SDG-aligned frameworks. Many allow investors and companies to measure how their investments and enterprise activity contribute to “achieving” the SDGs. Different approaches to measuring and integrating the SDGs are a positive sign that they could become best practice around how the sector designs for impact:

  • SDG Compass developed by GRI, the UN Global Compact and the World Business Council for Sustainable Development (WBCSD) provides company-level guidance on measuring and managing the effect and contribution of companies toward the SDGs
  • Toniic—a global action community for impact investors – released a framework earlier this year to allow their investor community to align their investments with the SDGs. These framing facilitated better identification of synergies across global investment opportunities
  • The MSCI ACWI Sustainable Impact Index works across the public markets to consolidate the 17 Goals into five investible themes – basic needs, empowerment, climate change, natural capital and governance. The Index identifies companies that derive at least 50 percent of their revenue from products and services that address environmental and social challenges within these themes, and weights them accordingly.

Innovations in Products and Processes

Impact investors are also leading in other ways, experimenting with actual integration of the SDGs into their decision-making process. For these investors and managers, the SDGs offer guidelines on how they make decisions, the investments they select, the companies they support and how to measure that impact:

  • Encourage Capital, an emerging market-based private equity fund manager has identified five impact objectives all closely aligned with the SGDs—financial inclusion, climate change, sustainable infrastructure, sustainable seafood and water conservation. According to a GIIN Report on the SDGs, Encourage uses the SDGs to “ground the impact outcomes that might be more difficult to conceptualize.”
  • Sonen Capital, a multi-strategy impact investing manager framed its 2015 Annual Report around how its investment strategies link to the SDGs. According to the firm, the SDGS could be good for business, serving as a “compass” to ensure investments can be measured in their contribution to the Goals.
  • PGGM, the second largest pension fund in the Netherlands, modified their investment strategy to include “Sustainable Development Investments (SDIs)”. These investments must fulfill regular risk return requirements, while providing a substantial and measurable contribution to one or more SDGs. Aligning across six of the SDGs, PGGM focuses on climate change mitigation, water, food, and health.

The above are only a handful of the innovative experiments and commitments on the part of impact investors to make the SDGs a part of how we invest and what we measure.

To truly end global poverty and achieve the Goals, we’ll need many different folks around the table. Creating a common language for all actors is critical and we should continue to commit to learning from those who are experimenting. We hope that the development of measurement frameworks, investment products and ecosystem building will only increase over time. To facilitate doing that the right way, creating synergy across how we talk about the Goals will take us one step closer to effectively channeling capital to solve our most pressing challenges.

With thanks to Mai Nguyen (Social Innovation Intern at the Case Foundation) for her support in researching this piece.  

5 Things I Learned as an American Express NGen Fellow

As a member of Independent Sector’s American Express 2014 NGen Fellows cohort, I am honored to be one of a dozen leaders, under the age of 40, selected from across the country, to develop our capacity to lead, strengthen our professional networks and elevate our accomplishments on a national level. Designed to be a leadership development initiative, the NGen fellowship provides mentoring, leadership training and an opportunity to participate in a collaborative project to benefit the social sector.

As my fellowship drew to an end, I was delighted to join in welcoming the new 2015 class of fellows at Independent Sector’s annual member meeting a few weeks ago, where several of the new inductees asked me to share my reflections from the yearlong experience. It was the perfect time to pause and consider how the program affected me, and it was also a chance to assess what my own contributions to the program were. I came up with five key takeaways that I’m sharing in the hope that it will help to inform not only the future NGen Fellows, but also other young leaders in the nonprofit sector.

    1. It’s a Journey. At the beginning of the experience, I thought that filling out the application and being selected were going to be the hardest parts of the fellowship. I mean really, how hard can it be to accept a recognition, read some excerpts from a book and share some experiences with 11 other people? Turns out, it can be pretty difficult — especially when you end up challenging your own definition of what a leader is and how to lead. My peers in the fellowship and I quickly learned that we’d have to push ourselves and expand our understanding of what it means to lead. By the end of the 12-months, our cohort reflected on the experiences we had shared and we recognized just how far we had come.

      To anyone who is looking to grow as a leader, I strongly suggest taking the time to explore how others around you lead — even those who lead in a style that is different than yours or that you may not agree with. You don’t necessarily have to adopt all the different styles, but you should keep an open mind and learn from them.


    1. It’s Worth the Work. One of the components of our fellowship was to complete a collaborative project that benefits the social sector. With everyone on the team operating “remotely” and no one designated to lead at the outset, it was difficult to figure out how best to work together. We were left to our own devices to figure this out, and that process in and of itself was a big part of our leadership experience. It wasn’t always easy, but in the end team members took turns stepping up and taking on different pieces of the project.

      Our cohort chose to explore how the social sector might mitigate barriers and encourage stronger, more sustainable innovation by shining a light on how social innovation is viewed and practiced by those in our field. Through a partnership with the Forbes Fund and a survey of Independent Sector members and social sector practitioners, we identified ways to support more adoption of social innovation —not only in work and deeds, but also in the culture of workplaces that strive to better serve people and communities. The result was the creation of a new report, The Necessary Challenge: Understanding and Fostering Innovation in the Social Sector.


    1. It’s a Family. Remembering where we all began a year ago, it is astonishing to think about all of the personal and professional changes that have happened for each and every one of us — and those relationships are by far the best part of the fellowship. The network we have created has yielded new partnerships, new connections and new opportunities that have lifted up us all. Beyond even our own cohort, we are now connected to six other classes of past and present fellows, who like us are driven to create transformative change in the social sector. The personal relationships ended up being just as important as the curriculum in our leadership development.


    1. It’s a Priority. It’s inevitable… life happens, work happens — and in my case, having a baby mid-way through the fellowship happened. I realized early on that if this fellowship was going to work for me, I had to make it a priority. In this case, it ultimately meant investing time and energy into my own leadership development, which is much harder to do than it sounds. All too often, we sacrifice our own needs in service of something or someone else, especially when it comes to a need that is more fluid and does not have immediate, tangible results — like leadership development. Making the fellowship a priority in my life wasn’t always easy, but learning how to make time for my own development in the midst of “life” has been invaluable.


  1. It’s an Honor. My final reflection… I am proud to be an NGen Fellow and follow in the footsteps of talented young leaders who have paved the NGen path before me. I hope that as you are reading this you’ll consider applying for a future class, or that you will nominate someone who is deserving and could benefit from this incredible experience. Special thanks to American Express and the dedicated staff members and board members at Independent Sector who make this experience possible.