Investors make impact investment commitment according to Sustainable Development Goals

A coalition of Dutch and Swedish pension fund managers have pledged to use the UN Sustainable Development Goals (SDGs) as a framework through which to make investor decisions, citing the need to meet “mounting social and environmental challenges”.

The group, which includes Swedish buffer funds AP1, AP2, AP3 and AP4 and Dutch asset managers PGGM and APG, has committed to invest in ventures that contribute to the outcomes of the SDGs, meet existing risk and return requirements and “support the generation of positive social and/or environmental impact”.

A letter announcing the initiative reads: “As institutional investors, it is essential to invest pension fund assets in these goals, and to do so at scale”.

Though impact measurement will not be required under what the group has dubbed “Sustainable Development Investments” (SDIs), the letter’s authors add that they will strongly encourage non-reporters to adopt a standardised method of impact assessment and reporting. “Recognising that one initially may have to use proxies for impact, such as revenues from specific solutions, we will push for being able to capture more tangible impact over time,” they continue.

The investors add that the range of themes included in the SDG framework will allow each institution to choose “specific themes” in which to invest, depending on what suits their own aims, their clients’ wishes and the types of asset classes preferred.

Though restricted to Dutch and Swedish signees for now, the intention and hope is for other institutional investors to join the initiative.

In addition, PFZW — the pension fund managed by PGGM — and ABP, have set ambitious targets to invest €58bn in Sustainable Development Investments by 2020, with an additional mandate to measure the impact of €20bn of investments made into a “select set of themes”.The letter’s authors add that the two funds “will actively collaborate with other like-minded investors” to accelerate sustainable investments for the benefit of their beneficiaries.

PGGM has previously spoken out about the need to properly measure the impacts of responsible investment, in order to avoid ‘SDG-washing’ — despite widespread enthusiasm among investors for the principles. The concerns mirror ‘green-washing’ in the environmental space – whereby actions or investment vehicles are described as ‘green’ despite proper consideration for environmental factors. Piet Klop, the Dutch pension fund’s Senior Advisor, Responsible Investment, told Responsible Investor that the practice was a “real risk” in the capital markets.

Klop also said there was already evidence of investment funds simply labelling existing products with an SDG. “Unless it is measured, supporting impacts is a little too easy,” he explained.

The UN-supported Principles for Responsible Investment (PRI) has also been considering including the SDGs as part of its guidelines. Speaking at the PRI’s annual conference in Singapore, Managing Director Fiona Reynolds confirmed the plans, in a bid to focus the reporting framework more on “outcomes and impacts”, rather than simply investment processes.

A full list of the letter’s signees:

Eduard van Gelderen, CEO at APG Asset Management
Eloy Lindeijer, Chief Investment Manager at PGGM
Ossian Ekdahl, Chief Active Ownership Officer at AP1
Eva Halvarsson, CEO at AP2
Peter Lundkvist, Head of Corporate Governance at AP3
Gerald Cartigny, Chief Investment Officer at MN
Arne Lööw, Head of Corporate Governance at AP4
George Coppens, CEO at Actiam
Larse Dijkstra, CIO at Kempen Capital Management