#18 GKC | 🤝 How Investors Align Investments with UN SDGs

Happy Friday! Another week, another exciting learning on impact measurement :)

Continuing our Know Your Investors Series, in collaboration with Turbo Net Zero.

Turbo Net Zero is a pure-play sustainability consultancy company focuses on delivering ESG value-creation solutions for corporates and investors.

We’ll discuss about the evolving field of impact investing across Southeast Asia in three parts.

1. Overview of global impact investing frameworks (Today’s Episode)

2. Sector-specific impact themes within SEA

3. Case studies of successful impact investors and companies in SEA

Let’s get started!

Introducing United Nations SDGs

The United Nations Sustainable Development Goals (UN SDGs) are a set of 17 ambitious objectives introduced in 2015, designed to create a blueprint for a better, more sustainable future by 2030.

What makes the SDGs actionable is their breakdown into 169 specific targets that provide measurable steps for countries, businesses, and individuals.

For investors, this framework offers opportunity to align investment strategies, playing a critical role in promoting sustainable progress and driving positive change worldwide.

Globally, mainstream frameworks such as the Sustainability Accounting Standards Board (SASB), the Principles for Responsible Investment (PRI) and the Global Reporting Initiative (GRI) have integrated the SDGs into their guidelines. 

In Southeast Asia, initiatives like Singapore’s Green Finance Action Plan and Malaysia’s Sustainable and Responsible Investment (SRI) Sukuk framework are also closely tied to SDG 7 and SDG 13. 

Why Is Aligning with SDGs Important?

As seen in the above trend, aligning investments with the UN SDGs has become crucial for impact investors to remain competitive in an evolving market driven by the growing demand for sustainable and responsible investments. Beyond staying relevant, this framework also offers several key benefits:

• Pre-investment Screening Guideline
  With 17 goals and 169 targets, the SDGs act as a guideline, helping investors identify opportunities that generate both financial returns and positive impacts.

• Post-investment Impact Assessment
  With the detailed roadmap of 169 targets and linked indicators, investors can measure how their capital contributes to social and environmental outcomes, effectively tracking the progress of their investments.

• Enhanced Risk Management
  Aligning investments with the SDGs can also help investors manage risks, particularly those related to environmental, social, and governance (ESG) factors.

For instance, investments that align with SDG 3 (Good Health and Well-being) can be evaluated by outcomes such as improved healthcare access or reduced disease rates in a specific region. This measurable progress ensures that investors can gauge the effectiveness of their portfolios in achieving meaningful change.

Case Study: How Do Investors Align Investment Opportunities with UN SDGs

For impact investors, SDG alignment can either be conducted at pre-investment screening stage or post-investment impact assessment stage.

Material Investment Opportunities Identification

The United Nations Development Programme (UNDP) has developed SDG Investor Maps, a tool designed to help investors identify material SDGs by country.

For instance, Indonesia's map highlights 18 key investment opportunities across sectors such as infrastructure, healthcare, education, and food and beverage. Within each sector, the map provides insights into market performance, risks, and active market players, giving investors a comprehensive view to support pre-investment screening. 

Diving further into the details, affordable housing construction for low-income populations presents a key opportunity in Indonesia’s infrastructure sector. The platform lists active market players in the sector, such as PERUMNAS, Elang Group and PT Waskita Karya Realty. It also provides detailed information on project Return on Investment (ROI), Return on Equity (ROE), and average ticket size, helping investors assess potential investments.

Post-Investment Impact Assessment

When it comes to measuring, managing, and optimizing impact, tools such as GIIN's IRIS+ System are widely used. Leading SEA impact investors, like Patamar Capital and Impact Investment Exchange (IIX), already incorporate IRIS+ metrics to measure their investment outcomes.

For more detailed steps on how to use the IRIS+ System, please refer to our previous edition.

Key Takeaways

The future of investing in SEA is undeniably intertwined with sustainability, and aligning with the UN SDGs will be crucial for investors seeking to make a meaningful difference while remaining competitive in an evolving market.

Next week, we will explore specific impact sectors in Southeast Asia with real cases.

Stay tuned!

Again, thank you Turbo Net Zero for this amazing content collaboration.

If you are an impact investor looking to implement ESG strategies OR corporates exploring impact measurement strategies, hit Kenny up!

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Hope this is helpful! 🙂 

Feel free to reach out via LinkedIn or email if you have more questions.

References

• United Nations Sustainable Development Goals

• SDG Investor Map

• SDG Investor Map for Indonesia

• Affordable Housing Development in Indonesia

• Singapore’s Climate Action Plan

• PRI SDG-aligned Investment Tool