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.  

Are the SDGs the North Star for Corporations?

Each September, delegations of public and private sector representatives from almost every country meet at the UN General Assembly (UNGA) to discuss how best to work together to solve the world’s most endemic political, economic and security challenges. On the development front, a framework called the Sustainable Development Goals (SDGs) serves as a collective action agenda, with progress measured against 17 primary goals and 169 targets covering a broad range of issues inclusive of poverty, health, education, hunger, women and girls, city sustainability, climate change and others. Experts estimate that it will take approximately $2 trillion a year—through the expiration date of 2030—to finance the goals. That’s a total need of about $26 trillion. If we can find a way to fund the Goals, we have the potential to end global poverty and hunger, protect the planet from degradation, ensure human beings can enjoy fulfilling lives, and foster peaceful and inclusive societies.

This means we have a lot of work to do. For years, SDG organizers and activists have pushed the private sector to play a more robust role in developing and delivering on the framework. And many corporations have stepped up to the plate in the process, even aligning their own activity with the Goals.

Recent rhetoric around “urgency” and “need” and “responsibility” on the part of private actors has been deafening. For many of these organizations, focusing on the Goals is synonymous with understanding what their company’s future might look like. In a world of increasingly scarce resources, rapid automation, global climate shifts and growing power of a socially conscious customer-base, sitting on the sidelines may mean getting left behind. The imperative to pursue these global mandates can either be to mitigate risk or to truly appreciate the value of profit and purpose. Regardless, the zeal with which corporate leaders and institutions are reaching for the baton feels unprecedented.

Conversations during UNGA week were abuzz with one key question—how can the private sector approach the SDGs in a way that actually achieves our shared global objectives? In response to this, the Global Impact Investing Network, in partnership with The Abraaj Group and Bank of America Merrill Lynch, convened business leaders to discuss what they’ve been doing to meet this goal and what more will be needed.

Inspired by the enthusiasm of the participants—and the ambitious thinking of changemakers in the room, here were some things we heard:

First, we have to start talking about the SDGs as a framework, not a silver bullet.

It was inspiring to hear representatives from Safaricom, Royal Phillips, and LADOL broadly agree that the SDGs create a construct for real conversation. Specifically, the Goals offer an organized way of aligning business activities with delivering impact. The segmentation of goals—and even more importantly, their targets—help businesses understand which of their peers are tackling the same problems and encourage collaboration towards these ends. In our own Impact Investing work, specifically through the Impact Investing Network Map, we’ve seen firsthand that there’s real value in understanding who’s playing in your space. By identifying likely allies, organizations are motivated to work together to achieve better results.

Second, the private sector must be the nexus for change, not an afterthought.

Capital and investment have often powered the wheel of innovation, for better or worse. As our panelists pointed out, businesses are not just a key stakeholder in systems-wide change, but a key organizer. Particularly in emerging markets, they are required to work with local communities, align different sources of capital, and inspire local government to serve the immediate needs of their own supply chain. That’s a unique position to be in. Take healthcare, for example. To revolutionize the healthcare system in emerging markets, as was explained from the mainstage, the solution is not as simple as building one hospital. Businesses need to create relationships with pharmaceutical companies, train doctors and nurses and even improve local transport and infrastructure to facilitate effective treatment. As representatives of Abraaj’s Growth Markets Health Fund, Royal Phillips, PBUCC and the IFC made clear (through their partnership in the Growth Markets Health Fund), even the most catalytic investments or innovative solutions need everyone around the table.

Third, without refreshed norms on how the private sector operates, progress will be stunted.

Even with the best collaboration and innovation, how we measure success needs an update if the goal is to maximize impact alongside profit. And that requires a move from short term wins to long term sustainability. As Amy Jadesimi pointed out from the stage, we’ve allowed the industry to drift dangerously away from what “long term” used to mean in the 70s and 80s. Corporate trailblazers—like Paul Polman of Unilever—continue to urge businesses to rethink how they measure success and with what frequency. But many agree that to do this, we need to first educate those calling the shots, and that extends beyond the C-Suite. Shareholders need to be informed of the value of sustainable thinking and long-term planning. They need to be encouraged to use their voice and to exercise their votes in alignment with what they believe to be fundamental to the success of a company long-term. Financial managers need to be at the helm of product innovation, exploring new mechanisms that leverage both social and financial returns. Stakeholders—every entity or individual affected by a businesses’ core activity—must be engaged holistically. Even across private assets, there’s a role for Limited Partners to play with General Partners and fund managers to actively demand that they work with their portfolio companies to think beyond just the bottom line—for financial and social benefits.

Achieving the SDGs are more of a reality today than ever before. They are integral to the well-being of hundreds of millions of people around the world. Some corporations are ready to move to fulfill this mandate, while others are waiting to be inspired. If we can use the framework of the SDGs to usher in this new way of thinking, acting and partnering—with the private sector as an integral and active participant—we may truly have an opportunity to massively reduce global poverty.

Entrepreneurs + Toilets: A Matchup that Won’t Go Down the Drain

This week at the Case Foundation, we’ve been celebrating entrepreneurs — their role as innovators, job creators and the heart of economic growth — as part of National Entrepreneurship Month and Global Entrepreneurship Week.

It just so happens that within this busy week falls another day that is close to our heart — World Toilet Day — focused on raising awareness of the 2.4 billion people around the world who lack access to clean water and sanitation. Today’s efforts will also shine a spotlight on the incredible people and organizations working towards meeting the UN’s Sustainable Development Goal to ensure access to water and sanitation for all.

For me, it’s a not just a happy coincidence that these two important world celebrations — entrepreneurs and toilets — fall in the same week. In fact, I see them as closely intertwined. Admittedly, it’s an odd couple at first glance… what do entrepreneurs and toilets have to do with each other? Actually, quite a lot.

We talk a lot at the Case Foundation about the role that entrepreneurs can — and must — play to solve some of our most intractable social challenges. And opportunities abound to bring entrepreneurial thinking and approaches to address the sanitation crisis.

One of the organizations living this idea is Sanergy, a social enterprise and a grantee of the Case Foundation. We’ve written about its groundbreaking work in the informal settlements of Nairobi, Kenya and had the opportunity to spend time with the Sanergy team during our visit to Africa this summer. But what’s particularly worth highlighting about Sanergy on this year’s World Toilet Day is its unique approach to leveraging the power of entrepreneurship. Through its franchise model, Sanergy has created a community of 370 micro-entrepreneurs — known as Fresh Life Operators — who purchase and operate Fresh Life toilets, providing their communities with access to clean, safe and affordable hygienic sanitation.

The Sanergy team mentors and assists these entrepreneurs along the way: from providing training in basic business skills, to partnering with Kiva to provide access to interest-free loans, assisting in the set up of savings accounts and holding regular forums on best practices. Creating a community of successful Fresh Life Operators goes well beyond enabling these entrepreneurs to provide hygienic sanitation to their friends and neighbors (via the 764 Fresh Life Toilets deployed to date), but they are also helping them create jobs. To date, nearly 150 Fresh Life Operators have hired attendants to help run their toilets, creating new, steady jobs in an area with 40 percent unemployment.

Sanergy certainly isn’t alone in this endeavor to leverage entrepreneurship to address the sanitation crisis — our long time partner Water for People has piloted a “sanitation as a business” initiative, which it intends to build on in 2016. And WSUP (Water and Sanitation for the Urban Poor) has been a leader in this space, incubating a number of new initiatives that leverage the power of business and entrepreneurship to provide sanitation solutions in places like Ghana, Bangladesh, Kenya and Zambia, through its innovative WSUP Enterprises effort. And companies like Sanivation (an alumni of the incubator program run by our friends at Halcyon House), Pivot, x-Runner Venture and many others are making an impact by providing toilets and removing waste from communities in places like Kigali, Naivasha and Lima. The list of innovative organizations leveraging entrepreneurship to address the range of challenges in the sanitation crisis goes on and on.

It is my hope that someday, we won’t need a World Toilet Day because each and every person will have access to safe, hygienic sanitation, forever. But until that day, let’s celebrate the unexpected and critical role that entrepreneurs and innovators can play in changing the status quo.

Show your support for World Toilet Day by tweeting: Celebrate the innovative entrepreneurs working to address the global sanitation crisis this #WorldToiletDay!

A Fearless Approach to Ocean Conservation

Earlier this month, I found myself in a sea of sleepy-eyed millennials in a Georgetown University auditorium waiting for the first annual Sustainable Oceans Summit to begin.

The Sustainable Oceans Alliance (SOA), founded by Georgetown student and Case Foundation intern Daniela Fernandez, hosted the summit. SOA is one of the first student-led initiatives started in direct response to U.S. Secretary of State John Kerry’s call to action at the State Department’s 2014 Our Ocean Conference. In his speech, Kerry laid out the crucial steps each of us must take to ensure the health and sustainability of our oceans.

The opening announcement quickly set the tone for the event – we were going to learn exactly how we, as individuals, could change the tide. After seven hours of remarkable speeches and panel discussions from world leaders in ocean conservation, environmental policy and earth and biological sciences, the 400 in-person and hundreds more webcast attendees were indeed invested in keeping our planet blue.

Speakers like the legendary Sylvia Earle from Mission Blue and Maria Damanaki of The Nature Conservancy eloquently illustrated the interplay between the health of our oceans and the health of humankind. “We must protect our oceans as if our life depends on it – because it does,” said Earle. “Eighty five percent of corals are already lost; eighty five percent of fish are endangered, threatened or already gone,” stated Damanaki. After a long pause to let those statistics sink in she went on, “But there is hope in this hopeless situation. Human activity is ocean’s biggest threat and biggest hope. We have the power to change the fate our planet’s lifeline.”

An important focus of the summit, and a reflection of Fernandez’s interest in identifying multi-sector solutions, was the role of three vital industries: science and technology; corporations; and local and national governments. The summit proposed that by exploring the interconnectedness of ocean health and human behavior and wellbeing, these three sectors could realize a range of opportunities for innovative collaboration. The summit provided a new platform for champions of ocean conservation to highlight these opportunities: better business practices, effective legislation and cutting edge technology. The speakers emphasized how multi-sector approaches catalyze solutions to issues such as the global fisheries crisis.

The summit attendees were asked to do more than listen, and 7,500 signatures later the audience and social media activists had successfully made their voices heard. Together, we petitioned the United Nations to include ocean sustainability as a Sustainable Development Goal (SDG). SDGs are a comprehensive collection of actionable, social development goals designed to build upon the Millennium Development Goals (MDGs). SDGs should holistically address social inequalities, issues of poverty and environmental concerns, and it is essential that responsible ocean management does not get left out.

Palauan Ambassador, Stuart Beck, will deliver this very petition directly to the U.N. Secretary General Ban Ki Moon prior to the September 2015 vote to confirm the SDGs. We made our mark; but if the speakers made anything clear, it was that our mission doesn’t stop here.

As the summit came to a close, I found myself in a new environment – in a sea of wide-eyed millennials in a Georgetown University auditorium. We knew that it was our responsibility to take action now. Our naturally innovative and motivated spirit must be directed toward ocean sustainability to ensure a healthy and stable environment, economy and global community for future generations to come.



Click here to watch the full Summit.