The SDG investment case explains what the SDGs are, why there is an expectation that investors will contribute, and then makes the case for why investors should want to. Since the launch of the Principles for Responsible Investment in 2006, the preamble to the Principles has said: “We recognise that applying these Principles may better align investors with broader objectives of society.” All the countries of the world have agreed on a sustainability agenda, covering three broad areas – economic, social and environmental development – and comprising 17 global goals to be reached by 2030.

As well as the SDGs providing the first generally agreed framework that defines the “broader objectives of society”, SDG 17 clearly shows the global community’s need to get investors on board. But to do so, investors will want to know how contributing to the SDGs will help them fulfil liabilities and beneficiaries’/clients’ expectations about risk-adjusted returns. They will ask: Why should I consider the SDGs relevant to my investment strategy, policy, asset allocation, investment decisions and active ownership?

Responsible investment practices have gained enormous traction in the industry over recent years, which has already aligned investors, investments and active ownership, with the “broader objectives of society” to some extent. Positive outcomes can be realised through three mechanisms: integrating ESG factors in investment decisions, improving ESG performance through active ownership and allocating assets to thematic investments. To meet the challenges of the SDGs, responsible investment should not just look at how ESG risks and opportunities affect the risk-return profile of an investment portfolio, but also how a responsible investment portfolio affects those broader objectives of society.

This report is particularly relevant and important for institutional investors. The UN Commission on Trade and Development estimates that meeting the SDGs will require US$5 trillion to US$7 trillion in investment each year from 2015 to 2030. In order to unlock this opportunity, it will be critical for investors to re-orient their investment flows towards the new innovative products and services focused on finding solutions to achieve the SDGs. This report discusses the elements that make SDGs relevant for investors. When considering the wider role of finance in society, the SDGs are likely to become the common framework with which to shape future investment decisions and against which to judge the utility of finance.

The PRI will develop a programme that stimulates and helps signatories to align their responsible investment practices with the broader sustainable objectives of society. They will provide research and education, facilitate collaboration and embed the SDGs in their work on public policy, investment practices, active ownership and engagement.

1. The SDGs are the globally agreed sustainability framework and can support investors in understanding the sustainability trends relevant to investment activity and their fiduciary duties.
2. The SDGs are an unavoidable consideration for "universal owners". They can improve their long-term financial performance by acting in such a way as to encourage sustainable economies and markets.
3. The SDGs will drive global economic growth. The SDGs aim to create a viable model for the future in which all economic growth is achieved without compromising our environment or placing unfair burdens on societies.
4. The SDGs and targets provide a common way of referencing the move towards a more sustainable world, and can thus strengthen investors' ESG risk frameworks.
5. The SDGs as a capital allocation guide. If investors believe that providing solutions to sustainability challenges offers attractive investment opportunities, they can implement investment strategies that explicitly target SDG themes.
6. Countries, NGOs, companies and investors are all needed to help achieve the 17 SDGs and the 169 underlying targets. Never before has the global community set out such an ambitious agenda – and the need to meet the challenges is urgent.
7. The global SDGs are a clear call to action for the private sector. Some of the SDGs are easier to contribute to than others; sometimes public policy changes are needed and will be made to make certain SDGs more investable. Sometimes it is easier to address an SDG through investment decisions; sometimes it is easier to incorporate the SDG in active ownership. But either way, investors will be asked to contribute.
8. The Stockholm Resilience Centre has identified nine “planetary boundaries” within which humanity can continue to develop and thrive for generations to come, but in 2015 found that four – climate change, loss of biosphere integrity, land-system change and altered biogeochemical cycles (phosphorus and nitrogen) – have been crossed.