SDG Impact:
Investment Solutions for Global Impact

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Sustainability is the New Standard of Investing
Investors and business leaders are committed to investing in innovative
opportunities that deliver strong financial returns while reducing poverty andinequality, advancing health and education, and protecting the environment.

GROWING INTEREST IN SDG-ENABLING INVESTMENT
US$, trillions

$30.7

$13.3

2012

2018

Global assets managed according tosustainable investment strategies…in order to achieve
the SDGs we need aninternational financial systemthat works for all countries.
This needs to be combined withscaling up innovations and new
financing instruments andapproaches. Many developing
countries need support to build
capacities to maximize theseopportunities. UNDP is firmly
committed…to playing a keyrole in moving [this] agenda
forward.”Achim Steiner, Administrator, United
Nations Development Programme(UNDP).

Source: Global Sustainable Investment Alliance

Financing the SDGs: The Gap
Achieving the 17 Sustainable Development Goals (SDGs) set forth in the UN’s
2030 Agenda for Sustainable Development will take between US$5 trillion and$7 trillion per year. However, the current level of investment by governments,development agencies, and other actors is not enough to meet these ambitious
targets, which aim to reduce poverty and inequality and improve healthand economic opportunity by 2030, while mitigating the harmful effects ofclimate change. The investment gap in developing countries stands at about$2.5 trillion per year.1
The private sector can play an instrumental role in closing this gap. Mobilizing
just 7.76%—$6 trillion—of the global assets under management each year will
enable us to achieve the SDGs. That’s less than the amount that changes hands
each day in capital markets around the world.

What Accounts for the Gap?
The reasons why many developing countries attract low levels of domestic
and foreign investments—including SDG-aligned sustainable investments—are
many and complex. However, we can pinpoint several key underlying causes:
1UNCTAD2

Mobilizing just

7.76

%

of global assets undermanagement—less than theamount that changes hands
each day—would enable us
to achieve the SDGs.

• Limited data and insights about investment opportunities and risks. Investors
and enterprises (both domestic and foreign) in developing countries often havelittle or no information about possible SDG-focused private-sector investments,or how to align existing investments in support of local SDG priorities.

GLOBAL ASSETS UNDERMANAGEMENT (2018)• Limited capacities and networks. Despite growing interest in andmomentum toward SDG-enabling investments, many developing countries
do not have structures in place to advance these approaches. There isalso limited understanding of how sustainable investments can help drive
financial performance.

7.76%• High real or perceived policy and regulatory risks. These can stem fromunstable political environments and weak or nascent local private sectors andcapital markets, particularly in least-developed and crisis-affected countries.
Despite these limitations, interest among investors remains strong. Fromprivate equity to bonds to enterprises, investors are calling for tools that willallow them to identify areas of need, make targeted investments, and assess
their impact against a common set of standards.

$6 trillion to achieve the SDGs
$74.3 trillion total
Source: Boston Consulting Group, Global AssetManagement 2019: Will These ‘20s Roar?, 2019.

How Does SDG Impact Help Close the Gap?
In recent years, various development institutions have engaged with theprivate sector to enable responsible investment, resulting in several setsof useful principles and frameworks to guide these investments. However,currently there is no common set of assurance standards to ensure that aninvestor’s impact management practice is “SDG-enabling.”
To address the lack of authenticity around SDG-enabling investment, UNDP’sSDG Impact aims to provide investors and businesses with the clarity, insights,and tools they need to support and verify their contributions to achieving
the SDGs. SDG Impact has also developed a groundbreaking methodology totranslate development needs into investment opportunities at the local level.

Our vision:

Goals and Potential Impact

Our mission:

Achieving the SDGs will have a transformational impact on lives around the world,
paying rich dividends in the form of better economic opportunities, improved
health and well-being, and a cleaner environment in which children can grow andthrive. But fulfilling this vision will also pay dividends of an entirely different
sort—opening up $12 trillion in market opportunities, and 380 millions newjobs.2

SDG Impact provides investors
and businesses the clarity,insights, and tools required tosupport and authenticate theircontribution to achieving
the SDGs.

SDG Impact envisions a worldin which all capital flows
advance the Sustainable
Development Goals.

Along with these new opportunities, investors and enterprises will find thathigher levels of education and prosperity will produce a new generation ofworkers with the skills needed to take their businesses to the next level—as wellas a broader client base for their goods and services.
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Business and Sustainable Development Commission, Better Business, Better World, January 20173

Our Tools: An Overview
SDG Impact focuses on three main pillars that address the main barriers toSDG achievement:• Impact management• Impact intelligence• Impact facilitation

Development is abouttransforming the livesof people, not just transforming
economies”
Joseph Stiglitz, Economist and Nobel
Laureate

Impact Management: Standards and Certification
This includes three sets of Practice Assurance Standards, for private equity,
use-of-proceeds bonds, and enterprises. SDG Impact is also developing online
impact measurement and management training, and an SDG Impact Seal thatwould be awarded to funds or firms certified to the standards by accredited
independent certifiers.
Developed as a public good, the standards provide a way for investors tomanage, evaluate, and authenticate their SDG-enabling investments. Thereis currently no defined standard that enables auditors to ensure that aninvestor’s impact management practice is of sufficient quality to be considered“SDG-enabling.” This is critical to drive consistency, comparability, andtransparency. The standards are flexible and build on the many excellent
frameworks already in place for facilitating sustainable investment, including
the Principles for Responsible Investing, the UN Environment Programme’s
Finance Initiative, the Operating Principles of Impact Management of the IFC,
Core Characteristics of Impact Investing (GINN), and others.
The standards respond to a market-led acknowledgment that more is required
beyond reporting on current activities. Instead, they aim to shift practices
toward investments that integrate sustainability from the outset and strive formaximum impact. Giving investors a uniform way to gauge their progress helps
ensure the integrity and authenticity of these investments.
Impact Intelligence: Mapping Investment Opportunities
SDG Impact has also developed an innovative tool to provide investors withcountry-level market intelligence that highlights key intersections between
development need, policy priorities, and investor interest. Our SDG Investor
Maps provide localized insight into sectors and market conditions that advancethe SDGs. The methodology identifies Investment Opportunity Areas (IOAs)
that correspond to the SDGs. These opportunities are backed by actionable
data to guide investor decision-making.
For example, in Brazil, the pilot SDG Investor Map identifies 21 IOAs across sixsectors. Then for each IOA, we provide 17 data points across five categories.
The table on page 5 shows the data points for storage infrastructure for grain
value chains.

4How do the standards
advance the field?
Market-driven need forassurance standards

MarketSDG Impact Practice
Assurance Standards
SDG Impact

SDG Impact is actively developing
assurance standards to increase investor
confidence in SDG investments.

Assurance Standards for:• Private Equity• Use-of-Proceeds Bonds• Enterprises

HOW TO USE THE INVESTMENT OPPORTUNITY MAP

1. FIND

2. FILTER

3. SELECT

the list of Investment Opportunities,
with investment descriptions, country,
sector, sub-sector and SDG aligment.

the Investment Opportunities
according to your investment criteria,using any combination of Country
Sector, Sustainable Development Goal,
or Investment Timeframe.

an Opportunity Area to access its fullset of detailed resources, including
business models, impact cases, andusers and beneficiaries; economic,enabling, and risk factors; and impact
management classification.

Storage infrastructure for grain value chains
OVERVIEW • To improve key development bottlenecks in the food and agriculture sector, investment
could be driven to field-side cold or non-cold silos used for storing export grains.
• Silos could be built/owned/operated, or built and leased by experienced operators.

NEED CASE • Brazil’s grain storage capacity of 84% is far below the FAO recommended 120%, creating

systemic risk for farmers and cooperatives seeking to store bumper crops during low-priceperiods, and exposing them to predatory freight pricing (40-70% trucking rate hikes).
• This IOA could contribute directly to SDG2, particularly 2.3.2. (food producer incomes) and2.A.1 (government agriculture spend), and indirectly to SDG9, e.g. 9.1.2 (freight volumes).

USER OR • This investment would be targeted towards states like Mato Grosso, Mato Grosso do Sul,
BENEFICIARY Pará and Piaui, targeting small and mid-scale grain farmers.
• Sampled players undertaking this model yielded margins of 15% (22% EBITDA).

ECONOMIC• Market sizing should account for Brazil’s 75m ton deficit of grain storage capacity, aFACTORS

number set to expand given an expected 4.9% year-on-year increase in grain harvests.
• Commercializing domestic silos typically takes 6 months for steel, 12-18 for concrete.

ENABLING
FACTORS• Investment in grain storage benefits from growing political momentum.
• Storage is regulated (sanitary, technical specifications) through Law 9,973 (05/[00 and ‘13).
• Several credit lines stand out: BNDES at 5.25-6%; INOVAGRO 6.5%; BoB 2.5-4.6%.
• Investment partners with stakes include Banco Bradesco, Banco Votorantim & Safra.

RISKFACTORS• Investors should consider relatively high capex requirements, particularly for concretesilos, as well as strong subsector dependencies on global commodity markets.
• If not ventilated properly (and in sealed environments), silos can produce nitrogen andcarbon dioxide gases, presenting environmental (emission) and physical (explosion) risk.

IMPACTMANAGEMENT• Investments falling under this IOA are likely to benefit stakeholders (IMP classification B),
e.g. generating positive effects on positive outcomes for small and mid-scale farmers.

5Impact Facilitation: Fostering Partnerships for Investment
SDG Impact also convenes investor forums to foster investor connections andpartnerships that are aligned with the SDGs, as well as public-private policy
dialogues aimed at improving the environment for SDG-enabling investments.

How does SDG Impact add value?
Our tools add value for companies in several key ways. They:• Embed good practice. The standards provide guidance for incorporating
best practices, using the most up-to-date methods, principles, andframeworks in the field.
• Provide assurance. They promote integrity by encouraging users to commit
to transparent, universal standards and authenticate investments as SDG
enabling.

Who can use
these tools?
Our Practice Standards andInvestor Maps can be used bya wide variety of institutions,
including but not limited
to asset owners, investors,
enterprises, bond issuers,
governments, development
finance institutions, industry
bodies, research houses, andthe media.

• Benchmark. They allow for high-quality, comparable impact reporting andbenchmarking.
• Elevate standards equally. Our tools are provided by UNDP as a public good,
providing a platform that is neutral and accessible to all.
• Support trust-building. The standards give investors confidence that theirinvestments are being analyzed rigorously to assure that they promote theSDGs.
• Advance the field. It is our hope that our tools will encourage other investors
and enterprises to launch or expand their SDG-enabling ventures.

How does UNDP add value?
• UNDP’s worldwide authority and credibility, along with its strategic role insupporting the 2030 Agenda, makes it well placed to develop a globallyunifying vision, framework, and standards for what it means to invest for
SDG achievement.
• UNDP’s deep development expertise and local knowledge means that
it is well equipped to produce market intelligence on SDG investment
opportunities and related impact data.
• UNDP’s global network of offices and strong relationships with local partners
in the government, private sector, and communities allows it to facilitate
connections among private sector players and also with policy makers.
Through experimentation, innovation, and partnership—backed by solid
market intelligence and a common set of standards—we believe that the world
can embrace the ambitious targets set forth in the SDGs.

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Our tools encourage
investors and enterprises
to launch or expand
their SDG-enablingventures.

For Sustainable Development

sdgimpact.undp.org

info@sdgimpact.undp.org@sdgimpact

sdgimpact.undp.org

Cover photo by RawFilm. Printed on recycled paper.