Partly as a result of the Covid-19 pandemic and partly due to the absence of a common set of standards for defining sustainability investing, global asset owners and institutional investors are starting to use the United Nations’ sustainable development goals (SDGs) as a common standard to avoid greenwashing, that is, conveying the false impression that companies or the products in their portfolios are environmentally sound.
And while asset owners, pension funds, and superannuations have long wanted to avoid greenwashing, the absence of data and the lack of common standards for sustainability investing have made it extremely difficult to avoid the practice in many cases.
The recent launch of the Sustainable Development Investments Asset Owner Platform (SDI AOP) should go a long way to helping investors. The platform, using artificial intelligence, gathers and collates SDG-focused data and uses it as the basis for developing sustainable investment methodologies and strategies.
It also enables investors to assess their global capital market portfolios on their contribution to the SDGs and to report to their clients and external stakeholders transparently and consistently, using a common and auditable standard.
Adding creditability to the platform, and the use of SDGs as a standard, is the fact that it was establish by some of the largest asset owners in the world – APG, AustralianSuper, British Columbia Investment Management Corporation and PGGM – which together account for over US$1 trillion in assets.
Although the trend towards using the universally accepted SDGs as a standard for defining sustainability investing and avoiding greenwashing has been around for a while, it gained strong momentum this year as a result of several environmental catastrophes, particularly the global pandemic and the bushfires in Australia and North America.
The momentum towards using SDGs as the standard for avoiding greenwashing started in Australia, has caught on in Europe and North America, and is growing in Asia, particularly in Japan, Hong Kong, Singapore and Taiwan.