NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, September 5, 2019

The United Nations Development Programme (UNDP) today released 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% of global assets under management yearly(about US$6 trillion) 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,” Ms, Boggs-Davidsen said. “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.

“This is a bellwether moment that pivots us from using the SDG to map existing activities to a more integrated practice of directing investment proactively to achieve impact across the value chain,” Ms. Boggs-Davidsen said.

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