The large majority of global investors in alternative asset classes believe the United Nation’s sustainable development goals are tools that can help the investment industry address urgent environmental and social issues, according to new research by LGT Capital Partners.
In a survey of more than 200 institutional investors, including pensions, endowments and insurers from 28 countries, 91 per cent said they believe the goals are useful for this purpose. A quarter of respondents said they’re currently using the goals in their investment activities in some capacity, while 40 per cent said they plan to begin doing so within the coming two years.
Further, three-quarters (78 per cent) said they believe the goals will create new investment opportunities. Even more (89 per cent) indicated that using the goals will help investors measure more specific outcomes of environmental, social and governance considerations, but just 10 per cent noted they currently use the goals to assess the ESG impact of companies they own. Looking ahead, however, 40 per cent said they’re planning to start doing so in the next two years.
Among the numerous goals, investors cited the one focused on climate action and the one on affordable and clean energy as their top priorities to address in their current investment frameworks. Goals that have a clear link to new investment opportunities also held significant appeal, specifically projects surrounding clean water, health and education.
In a broader environmental, social and governance context, the survey found 84 per cent of investors said using ESG factors has either a neutral or positive impact on returns in an adjusted context. Notably, 54 per cent of respondents said they already use ESG and 47 per cent said they’ve excluded managers on ESG grounds.
“The SDGs broaden the ESG scope from risk management to value creation in financial, natural and social capital,” said Tycho Sneyers, managing partner at LGT Capital Partners and a board member at the UN principles for responsible investment, in a press release.