The Principles for Responsible Investment Mission calls on signatories (like us) to play a role in creating a sustainable global financial system which will “reward long-term, responsible investment and benefit the environment and society as a whole.” The preamble to the six Principles recognises that applying the Principles in investment decisions not only supports long-term value creation but may also better align investors with the broader objectives of society – in other words, the SDGs.
Many investors believe that investments in companies will only be profitable over the long term if the global financial system and societies grow in a sustainable and equitable way. And while responsible investment has typically focused on how ESG factors affect the risk-return profile of investment portfolios, it has tended to overlook how it supports the broader objectives of society.
As such, the SDG agenda requires signatories to move from a mere process-based approach of material ESG integration towards an outcomes-based approach that, while aiming to achieve market-rate return on investment, explicitly aims to contribute to the sustainability challenges put forward by the SDGs.
The PRI’s 1,700 signatories represent around one third of global private capital. To meet the SDG challenge, they would have to invest US$2 trillion annually in companies and other investments that directly link to positive SDG outcomes. By 2030, the deadline proposed by the UN, that should amount to cumulative 25% of assets under management having a direct positive contribution to the SDGs. These new flows of private sector capital will be crucial to meeting the global challenges put forward by the SDGs.