In 2015, the United Nations (UN) emphasized the need to address today’s global problems by defining so-called Sustainable Development Goals (SDGs), and this has had a major impact on the investment industry.
Based on the UN’s Millennium Development Goals, seventeen SDGs were formulated. Together with asteadily increasing general awareness of global sustainability, these goals have opened up new perspectives for the capital markets to offer new products and services, not only in the pursuit of profitable financial returns, but also to serve social and environmental purposes – and thus to contribute to a better world. As the impact investment industry has positively reacted to the SDGs and has continuously increased the amount of capital invested, investors have started to show a
more fundamental interest in developing an understanding of what exactly ‘impact’ means, and how it can be measured.
Although different tools are currently used in the market, each with its own impact measurement system, there is no single and standardized approach to measure impact on and contribution to SDGs. Our work is motivated by the wish to increase our understanding of key concepts and challenges associated with defining and measuring the social and
environmental impact of investing, and thus its contribution to the 17 SDGs. This whitepaper does not aim to present an all-encompassing ideal methodology to measure social and environmental impact or SDG objectives;
instead, it presents ten basic lessons learned from analysing the SDG impact of an investment fund and how these lessons can be helpful in understanding any fund’s connection to social and environmental impact and the SDGs.