As one of the founding partners of the Sustainable Developments Investments Asset Owner Platform (SDI AOP), Dutch asset owner PGGM, is a firm believer in embedding the UN Sustainable Development Goals (SDGs) into their investment process. As a subscriber to the data, we dug a bit deeper with Piet Klop, Senior Advisor, Responsible Investment, to understand how the SDI AOP is used within PGGM.
What are you trying to achieve with SDI?
The objective of PGGM is to accelerate market adoption of investments aligned with the SDGs by standardizing the way companies’ positive contributions to the SDGs are assessed. Ultimately, we want to be able to understand and explain the real-world utility of all our investments, first through the SDI volume (in euros) but then also through companies’ actual outputs, outcomes of impact.
Why is having this kind of SDI data so important to PGGM?
It really underpins our claim and goal of providing “pensions with purpose” with traceable and transparent evidence for alignment with the SDGs. The actively managed SDI-based strategy has outperformed its benchmark over the past year, demonstrating that impact at market-rate returns is possible.
How does PGGM use the SDI AOP data?
We generally use it in three different ways: 1. The classification of the entire portfolio and reporting of the percentage of AUM that is aligned with the SDGs 2. The creation of an ‘impact universe’ for an actively managed long-term equity strategy 3. The exploration of a possible SDG ‘tilt’ of the index portfolio.
What are the most relevant portions of the data set to PGGM?
- Company name and SDI status as majority SDI (>50% of revenues derived from solutions), decisive SDI (>10% or non-SDI (<10%)
- SDI confidence level from 1 (very low) to 5 (high) as an indication of the strength of a company’s SDI status
- Main SDGs for the number of SDGs a company’s products and services contribute to
- SDI rationale as this provides a company-specific explanation of the SDI status and confidence level
In addition to the SDI classification on the basis of current revenues, what other information are you looking at?
We’re very interested in the SDI outlook, in other words, the future contribution a company to the SDGs on the basis of its patents. Ultimately, we want to be able to capture a company’s real-world outcomes in tonnes of CO2 avoided, liters of water saved, number of patients treated etc.
Within in your organization, who uses the data?
The SDI AOP data is used by a different departments. For example, Investment Advice (Strategy) uses the data to define the universe and benchmark for the active strategy, and to explore a possible tilt in the index portfolio. Responsible Investment and Investment Reporting use the data for reporting purposes while Corporate Communications may use the company descriptions for use in internal and external communications.
For more information about SDI AOP data, contact us.