We recently held an ‘Investing in Climate Solutions Using SDG Data’ virtual roundtable of asset owners and consultants alongside British Columbia Investments (BCI) and PGGM. The event spurred an engaging conversation on climate investing and the practical applications of UN Sustainable Development Goals (SDGs) data, drawing representatives from across the US, including faith-based and non-profit plans, highly influential consultants, and some of the largest public pensions in the country.
With such diversity in plan type, climate investing objectives, and resources, it became apparent that the potential use cases for SDG data and the SDI Asset Owner Platform (SDI AOP) span the gamut. The SDI AOP is an asset owner-led consortium comprising AustralianSuper, British Colombia Investment Management and PGGM that aims to advance the standard for investing in the SDGs.
In fact, presenters and attendees of the roundtable touched on nearly everything from manager engagement and due diligence, board reporting, portfolio construction and risk modeling, to climate research and stewardship.
BCI presented its tailored dashboard that uses SDI AOP data to inform a holistic view of the plan’s internally managed portfolios, while simultaneously serving as a visualization tool for research and engagement with external managers. Extending beyond its public investments, BCI also utilizes the data to report on Task Force on Climate-Related Financial Disclosures (TCFD) and to evaluate climate opportunities within private-market investments.
PGGM discussed the evolution of its own use case from leveraging the data as a reporting tool to integration in its public equity allocations, where it is applying SDG tilts to its passive equity portfolios as well as using an SDG-aligned benchmark as the basis of its active portfolios. Similar to BCI, PGGM has also begun to amalgamate the SDI AOP taxonomy across its private market allocations, specifically as an input for target setting, progress monitoring, and overall impact measurement, with climate (SDG 13) as one of its five focus goals.
For a final example of portfolio integration, we provided a real-life case study of an enhanced passive solution constructed for an institutional mandate, taking into account multi-pronged sustainable investment objectives and incorporating SDI AOP data in the index construction.
As founding members and consumers of the SDI AOP, BCI and PGGM have a vested interest in ensuring the robustness of the data, but their objectives extend beyond simple data usage. As the members seek to institute a standardized framework and accelerate the adoption of the UN SDGs, they aspire to ultimately unite a global network in which asset owners, consultants and managers can together engage in regular discourse — in forums like this roundtable — to find a common language and pursue better capital alignment to socially responsible values.
From those who attended the roundtable, we observed interest in continuing the dialogue with peers and learning from SDI AOP members on further applications of SDG data, regardless of their plan’s current stage in defining and implementing a responsible investment strategy. For those who were unable to attend the roundtable, we would welcome an opportunity to connect and explore the many uses of SDG data within climate objectives or more integrated sustainability initiatives.