Blog Posts — December 8, 2021

What’s new for 2022? An interview with SDI AOP’s Research Director

James Leaton was recently appointed to the Sustainable Development Investments Asset Owner Platform (SDI AOP) as its Research Director. SDI AOP was launched by some of the world’s largest asset owners (APG, AustralianSuper, British Colombia Investment Management and PGGM) to create a standard for investing in the UN Sustainable Development Goals.

Working with technology partner Entis and Qontigo, as exclusive distribution partner, James leads the research and future development of the SDI AOP content. Just this week, the new 2022 data was released so we took this opportunity to find out more about what this means for investors. 

James Leaton, Research Director
SDI AOP

You have had different roles within the sustainability space – Senior Policy Advisor at the Worldwide Fund for Nature (WWF), Research Director at Carbon Tracker, leading climate analysis for Moody’s and a Consultant at PWC. Why did you join the SDI AOP?
I’ve been working on these sustainable development issues for 20 years and have seen them from all sides – but the relationship to financial decisions has always been important for me and that is why the approach of SDI AOP is appealing. Mapping to products, services and revenues makes the data relevant to the fundamental businesses that investors have a stake in. SDI AOP is also very timely in that it is linking the research directly to the needs of asset owners, so they have greater visibility and oversight of the inputs that are helping them deliver their investment strategies.

Tell us more about the data – specifically, what is new for this release?  
This animated graphic gives a great overview of the data. In summary, here are some of the extra dimensions the 2022 data provides:

  • The coverage increases to 8,700 which includes entities that align to the leading EU and US corporate/credit investment grade bond indices.
  • There is now a breakdown of SDI revenues per company, per SDG instead of just the total sum of SDI revenue. This is important because users can now align their investment process to specific SDGs as well as deliver enhanced exposure reports based on the individual SDGs.
  • We’ve included a new field indicating the confidence level in the SDI status being at least Decisive. This additional data field should give customers more opportunity to expand their SDI exposure.

What do you mean by ‘Decisive’?
Once we identify the companies that offer products and services that contribute to the SDGs and sub-goals, we classify them as Majority, Decisive, Non-SDI based on the percentage of revenues (exceeds 50%, 10-50% and less than 10%, respectively).Alongside this classification is an indication of the confidence level in that percentage, which some users also consider to differentiate.

How often do you release new data classifications?
In 2022, we will start biannual releases of the data, aligned with relevant index updates. This will enable us to integrate updates to the approach on a more frequent basis. One of the strengths of the dataset is the rigour of our processes, including both the asset owner thematic review, and the technology development. Part of my job is to ensure that level of quality is maintained.

How do you prioritize what to focus on for the next release?

We are working with our growing community of asset owners to refine the approach and ensure the outputs match up to the way analysts and portfolio managers want to apply them. We want their feedback to drive the different dimensions of our research agenda – whether that be extending coverage, reviewing the approach to evolving sustainability issues, adding more functionality, or designing additional products.

Can you tell us what’s next?
We intend to continue expanding our fixed income coverage. Topics like the energy transition are fast-moving and we need to iterate our thinking, and ensure we are taking a coherent view to similar themes throughout the value chain. We are also exploring with our partners some additional offerings, for example, to enhance the analysis of SDG-related risks and opportunities.


About the SDI AOP

The SDI Asset Owner Platform (SDI AOP) is responsible for the development and maintenance of the SDI taxonomy and guidance, SDI definitions and SDI classification methodology (www.sdi-aop.org). The SDI AOP uses company’s products and services and considers acknowledged transformational leadership supporting positive social and/or environmental impact, as starting points to classify which companies qualify as SDI.

For more information, contact sdi@qontigo.com.