Tomorrow, the OECD and the United Nations Development Programme (UNDP) are launching their Impact Standards for Financing Sustainable Development – a move that Cliff Prior, Chief Executive of the Global Steering Group for Impact Investment describes as “really remarkable”.
“It is bringing together the richer donor countries and the UN's interest in the whole world, including the emerging economies,” he says.
“This is a set of standards which is very much focussed on the development assistance side, and it is really great to see the OECD and UNDP working together. This is a really important step.”
The OECD UNDP Impact Standards for Financing Sustainable Development will be the latest addition to a suite of standards that the UNDP has been developing, including the SDG Impact Standards for Private Equity Funds, the SDG Impact Standards for Bonds and the SDG Impact Standards for Enterprises.
“Together, the four sets of standards connect different actors and pools of capital through a shared language and approach for integrating impact management and contributing positively to the SDGs into internal decision making,” says Belissa Rojas, an advisor to the UN SDG Impact team.
Christina Leijonhufvud, CEO of BlueMark, which sits on the assurance working group of the UN SDG Impact Standards, says they reflect the need for more guidance on how an organisation can contribute to the SDGs meaningfully.
“The UN has witnessed almost universal uptake of the SDGs as a sort of loose reporting framework for both corporations and investors that are claiming to be advancing positive impacts for people and the planet. But I think they recognised that this was not enough.
“There is a need for guidance and rigour around the use of the SDGs. The UN recognises that while they have been enormously valuable in driving consensus around a common, universal way to report on a company’s or investor’s impact intentions and goals, they are prone to being manipulated and misused, and could be a tool for impact washing.”
Priscilla Boiardi, a Policy Analyst at the OECD, says partnering with the UNDP on its Standards was prompted by its drive to work better with the private sector for the achievement of sustainable development through blended finance and impact investment.
“Standards are necessary so that public resources used to de-risk private capital are going where they are needed most, and to organisations actively trying to achieve positive developmental impact,” she says.
Another key role of the Standard is to help development finance agencies and private investment managers ‘speak the same language’.
“This is bringing together two fields, impact investing and development assistance, that have been quite separate,” says Prior. “What these standards do is bring impact, intentionality, management and measurement into development finance, which is really powerful. It increases your level of responsibility and respect to the donor countries, and also brings that transparency.”
Whereas existing standards like those from the Sustainability Accounting Standards Board and the Global Reporting Initiative are focused on reporting, the suite UN SDG Impact Standards emphasise the need for impact to be considered in the decision-making process, explains UN’s Rojas.
“The standards don’t look to duplicate what’s already there, rather fill the gaps – especially in strategy and governance practices,” she explains, adding that the ultimate goal is to put impact on an equal footing to profit in an institution’s management process.
That makes the standards “demanding”, she concedes.
“They are written to address what we need to do if we want to tackle our climate crisis or our social crisis. It's a completely different way of doing business.
“Business is not wholly responsible for achieving the SDGs, but it must play its part and this is the change we need to put business and investments on a sustainable footing that achieves long-term equilibrium – for people, the planet and for businesses and investment portfolios.”
However, a senior figure at the UN, who asked not to be named, questioned the UN SDG Impact team's approach, saying it was “not clear which, and how many, organisations were involved in the consultation”.
“Engagements with the private sector require an open and transparent consultation, and we would expect the collaboration of external parties like IFC, UNEP-FI, UNCDF, and other global initiatives – I'm not sure if that is the case”.
He also questioned the need for a new set of standards.
“The market is packed with impact guidelines and frameworks, it is important to ask what the additionality of the UN SDG Impact Standards is, and how these Standards complement existing green bond initiatives and processes. We don't need to reinvent the wheel.”
To ensure their integrity, the UN is developing an SDG Impact Seal – a label tied to a third-party assurance against the UN SDG Impact Standards.
The next step will be to raise awareness of the Standards and encourage market take-up. Rojas says a number of outreach initiatives are underway, including a collaboration with Singapore state-backed fund Temasek to mobilise private capital for positive social and environmental impacts in Southeast Asia using the UNDP SDG Impact Standards, SDG Investor Maps, and SDG Investor Platform in the region.