Definition of Sustainable
Development InvestingGlobal Investors for Sustainable Development (GISD)

DEFINITION OF SUSTAINABLE DEVELOPMENT INVESTING
A. Introduction
The purpose of this definition is to codify a shared understanding and working definition of ‘sustainable
development investing’ for the UN Global Investors for Sustainable Development CEO Alliance. Althoughvarious classifications and descriptions exist for related terms, including those put forth by industry bodies
and individual organizations, there is no one agreed upon definition of sustainable development investingthat can be used by our firms. This definition, which builds on existing initiatives, is filling this gap. It aims
to ensure the credibility of sustainable development investing and mitigate the risk of SDG-washing.
B. Definition
Sustainable Development Investing (SDI) refers to deploying capital in ways that make a positive
contribution to sustainable development, using the Sustainable Development Goals (SDGs) as a basis formeasurement. The contribution can be made through products, services, and/or operations or throughprojects financed across asset classes and in multiple sectors or themes. The positive contribution of aninvestment should not be outweighed by negative impacts from the same investment over the life of thisinvestment. Investors can strengthen their positive contribution through active ownership, such as
engagement for more sustainability in companies, sectors and projects they invest in, as well throughgreater investment in developing countries.
C. Commentary
The definition implies more than the maintenance of status quo; SDI must make positive contribution tothe SDGs. SDI may be achieved through impact investing and some ESG investing strategies, though it isbroader than both terms (see spectrum diagram below).
Diagram 1: Sustainable Development Investing (SDI) Spectrum

Source: UN/DESA based on RIAA (Responsible Investment Association of Australasia)
Note: By this definition, SDI is broader than impact investing, as it includes some ESG investing strategies that candemonstrate a measurable positive real-economy contribution to the SDGs.

Global Investors for Sustainable Development (GISD)

D. Operationalizing the definition
The positive contribution of an investment to sustainable development will be assessed in accordancewith the decision tree described below.
Figure 1: SDI decision tree

Step 1: To qualify for a positive contribution to sustainable development investment, the activity financed(i.e., company products/services or a project) will have to contribute to the attainment of the SDGs,
checked through fundamental analysis at the company/project level1 (e.g. it is not sufficient for a company
to be active in the health sector more broadly to qualify as contributing to SDG 3). While doing thisassessment, investors will need also to make an effort to ensure that contributions to sustainable
development are not outweighed by negative impacts from the same investment over the life of thisinvestment2 and that robust investment practices are in place to measure and manage this positivecontribution.3
As an initial step:••

For companies, to assess whether products and services contribute to Sustainable Development,
investors can draw from taxonomies of sustainable activities4 with the ultimate aim of covering
all related SDGs.
For projects, financed for instance through fixed-income products, the contribution can beassessed against sustainable-related standards, such as the ICMA Green Bond Principles andSocial Bond Principles and the related ICMA high-level mapping to the SDGs.

1

While developing guidance for operationalizing the definition, Working Group 3 could include guidance on propersustainability assessments of project/company, which could be done internally or by external providers.
2This remains a complex exercise for the time being, which should become easier over time once methodologies are further
developed and the availability of data is improved. The contribution of the investment should be monitored over time to ensurethat it continues to be positive.
3 Working Group 3 will lay out existing assessment tools and investment principles in the Sustainable Development Investing
Navigator. Working Group 3 could also work on defining active ownership and corporate governance in line with theSDGs.

4 Please see the different taxonomies presented in the Sustainable Development Investing Navigator.

Global Investors for Sustainable Development (GISD)

Investment in areas neither covered by a taxonomy of sustainable activities nor in line with sustainabilityrelated standards, nor included in an exclusion list,5 will be considered “neutral.” Projects and companies
with a majority of their revenue derived from activities with negative impact on the SDGs should beexcluded (negative screening supports SDI but is not sufficient - see Diagram 1).
Step 2: To be eligible as SDI, companies will have to be transparent about their business practices andprovide adequate sustainability disclosure and reporting.6 Companies not qualifying as positivecontributor under step 1 could still be considered as SDI in limited cases where their strong sustainablebusiness practices lead to positive transformation in their industry and their products and services do nothave a known negative impact on the SDGs. Active engagement by investors can help achieve these strong
sustainable business practices and create a positive transformation. Company reporting will need to be
cross-checked with unreported information (e.g. media) to verify the absence of inconsistencies withsustainable development objectives.7
Working Group 3 will continue to develop and revise guidance for operationalizing the definition basedon practical experience from GISD members willing to pilot the definition within their own portfolio,
business operations, and products.

5 Exclusion list might differ widely by investors but it is expected that convergence will emerge over time.

6 Working group 3 intends to work on clarifying what adequate sustainability disclosure means (for example, this could include

having a plan/ambition to be aligned with the Paris Agenda and 1,5 degrees)
7 For example, using the UN Global Compact principles.

The Global Investors for Sustainable Development’ (GISD) is analliance of 30 business leaders convened by the United Nations
Secretary-General to provide decisive leadership in mobilizing
resources for sustainable development.