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Assessing Alignment with the 17 UN Sustainable Development Goals

How well are companies currently aligned with the 17 UN SDGs? A webinar by Responsible Investor titled “Assessing Alignment with the 17 UN Sustainable Development Goals” on 15th October 2020 answered that very question. To save your time, we summarized a few key insights from the talk.

The webinar had 4 speakers: Olga Emelianova (MSCI), Paul Horrocks (OECD), Mathieu Verougstraete (United Nations), Lisa Beauvilan (Impax Asset Management) and was moderated by Daniel Brooksbank (Responsible Investor).

An insightful talking point in the webinar was the research done by MSCI on the current state of SDG alignment in thousands of companies.

One insight is that public commitment towards SDG alignment might not always indicate a positive impact and vice versa – many companies that have a great impact do not publicly commit. It was found that 9% of companies in the MSCI ACWI Index of over 3000 companies, who committed to supporting an SDG were involved in recent controversies, while 28% companies did not publicly announce their efforts but were aligned with at least one goal. If investors want to find the most aligned companies, looking for public commitments isn’t always the best bet.

Another piece of interesting research by MSCI shows the current state of SDG alignment across 8550 individual companies, highlighting the most and least neglected goals. It turns out that decent work and economic growth (Goal 8) gets most positive attention. Goals related to climate change get also positive attention, but hundreds of companies are still strongly misaligned with climate mitigation (Goal 13), clean energy solutions (Goal 7) and sustainable consuption and production (Goal 12). A major contributor to the negative effects is related to the energies and utilities sectors. Out of the thousands of companies researched, only get most of their revenue from clean energies. A whopping 91% of the energy sector is still relying on fossil fuels and is contributing to the misalignment of multiple SDGs.

On a more positive note, the speakers were asked about why investors should even care about SDG alignment, to which they responded that seeing which goals are most misaligned gives a clear indication of unmet needs in the society, thus large potential for growth. Therefore, investing in companies that contribute to the most neglected goals fulfill unmet needs and might have the biggest potential for future growth. 

A final thought from the Webinar was a reason for investors to care about SDG alignment. An overview of how many companies are aligned or not highlights the major unmet needs in the society. There is the biggest potential for growth – misaligned or unaligned SDGs. Therefore investing in companies that directly align with these goals have a high potential for growth.

Read more about SDG alignment insights https://www.msci.com/insights-gallery/un-sdgs-aligned-with-the-companies

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