Impact Investments & Private Sector for the SDGs: The Case of Australia
This blog is based on Episode 9 of the Good Will Hunters Podcast, with Giles Gunesekera, Director of the Global Impact Initiative.
I recently interviewed Giles Gunesekera, the Founder and Chief Executive Officer of the Global Impact Initiative. The Initiative works with businesses to create bespoke impact investments, intended to generate a positive financial return as well as a positive social return. The investments are aligned with the United Nations Sustainable Development Goals, for several key reasons.
Much like a “to do” list for the world, the Sustainable Development Goals function as a set of unquestionably important objectives for the common future of humanity and the planet. Each of the Goals has a combination of quantitative and qualitative targets. The use of quantitative targets enables the SDGs to be written in a language which investors are familiar with. Identifying specific benchmarks of success, means that each of the SDGs can be measured objectively, accurately and observably. It is for this reason that the impact-investing strategies pioneered by the Global Impact Initiative are predicated on the SDG benchmarks.
Australia has been a slow adopter of the SDGs, however there has been an upsurge in momentum throughout the past year, particularly in the lead up to the recent High Level Political Forum held in New York. Australia was one of the 47 countries to conduct a Voluntary National Review into progress on the SDGs.
Impact investment, using capital for social good, has the potential to revolutionise Austrailia’s approach to achieving the SDGs. Australia has the fourth largest retirement savings market in the world, with close to $2.6 trillion AUD in superannuation. Gunesekera refers to this as “lazy capital” that is often not being invested in a way which aligns with the values of the investor. Capital such as this can be invested in organisations that are working towards achieving the SDGs, thus enabling a positive financial return alongside tangible and observable social progress.
During the 2017 UN General Assembly, the UN Global Compact discussed the emergence of case studies on how the SDGs should be institutionalized in businesses. The Global Compact, known as the world’s largest corporate sustainability initiative, encourages businesses globally to institutionalize the SDGs in their internal processes and frameworks. Impact investment provides an innovative means of doing this, by enabling companies to simultaneously focus on financial return and investment in the global goals.
Given that the majority of financial capital resides in the private sector, and not the charitable or philanthropic sectors, it is vital that businesses actualize the impact they can have on achieving the SDGs. The Global Partnership for Effective Development Co-operation too believes that given the scale and scope of the SDGs, the private sector needs to be involved.
To this end, the Global Impact Initiative has launched an impact investment strategy focused on women and girls, the first of its kind globally. Naturally, the strategy aligns with SDG 5 on achieving gender equality and empowering women and girls.
I wrote an article recently for the Lowy Institute Interpreter, on the increase in B-Corp Certification in Australia, particularly in the wake of the Royal Commission into financial services. Increasingly, businesses want to distinguish themselves, through independent certification, as being social and environmentally responsible. Impact investment in the SDGs presents another opportunity for businesses to continue with their core mandate of generating profit, whilst simultaneously considering the interests of non-financial stakeholders and being part of the global effort to achieve the world’s most important to-do list.
Whether through creative capitalism, the green economy, sustainable corporations or social business, there is no question that the private sector can, and does, have an unrivaled impact on the achievement of the SDGs.