The Sustainable Progress Investments Asset Proprietor Platform_ Aligning portfolios with the SDGs
Organisation particulars
Establish: Sustainable Progress Investments Asset Proprietor Platform (SDI AOP): APG | Australian Super | British Columbia Funding | PGGM
Signatory type: Asset householders, funding managers
HQ location: Netherlands
Complete blended AUM: €1 trillion
Coated on this case study
Asset classes: Equities, fixed earnings
Funding space: World
As asset householders that aim to hurry up sustainable funding outcomes for our beneficiaries, we would have liked to develop a solution that may translate the UN Sustainable Progress Targets (SDGs) into an investable framework applicable for all asset classes.
In 2020, we collaborated to create the Sustainable Progress Investments Asset Proprietor Platform (SDI AOP). Working with our prospects, we’re making a family of merchandise – centred spherical a taxonomy – that concentrate on companies’ companies, using revenues and totally different publicity metrics, to provide clear, quantitative datapoints on SDG contributions[1].
Why we think about SDG outcomes
We use the SDGs as a holistic lens to view how aligned our holdings are with the sustainability targets set by governments. As additional belongings are allotted in course of achieving the SDGs, we anticipate that corporations that will ship the choices required to satisfy them will experience earnings progress.
We wanted to establish the SDI AOP Taxonomy to find out funding options that will make a optimistic contribution to the SDGs. We deliberately focused on whether or not or not corporations are primarily aligned with the SDGs by the use of financial metrics and core outputs. Sustainability outcomes is an area that has often obtained a lot much less consideration than typical ESG metrics on risks, controversies, compliance, and operational effectivity, nevertheless our purchasers and beneficiaries have increasingly more confirmed their curiosity in supporting the SDGs.
How we think about SDG outcomes
To create the SDI AOP Taxonomy, our funding teams systematically went by way of the SDG sub-targets and metrics to find out sorts of companies or merchandise that may be instantly linked to the SDG outcomes, as confirmed in Decide 1.
Decide 1. Occasion of the taxonomy of companies developed for SDG 3
Current Fullscreen
We then labored with our info science affiliate, Entis, to classify companies providing these companies or merchandise, using info from their annual evaluations, financial evaluations, investor exhibits, internet sites, and product pages.
We use artificial intelligence and machine finding out to scale our course of and always improve the SDI dataset. For each info launch, we evaluation any supplies changes and additions to the knowledge, providing a further layer of human validation.
Caring inside the methodology’s governance helps to verify the taxonomy has a strict technique, unbiased of political or enterprise pursuits, and models a traditional which may be utilized all through portfolios and merchandise on the platform. We think about this may increasingly counter greenwashing issues which may be prevalent inside the commerce.
We determine the SDI classification of an entity based on how plenty of its enterprise is aligned with various SDGs. As confirmed in Decide 2, we classify companies which have over 10% of their enterprise contributing to an SDG as ‘decisive SDI’, whereas these with over 50% are categorised as ‘majority SDI’.
Decide 2. How we determine the SDI classification of entities
Current Fullscreen
One in every of many principal challenges of making the taxonomy dataset was to create one factor that labored at scale all through our desired universe, which has grown to spherical 9,000 equity and bond issuers and continues to develop. For example, we’re in the mean time together with extreme yield and rising markets fixed earnings safety.
Our decision was to focus on financial datapoints which may be broadly obtainable all through each sector and by no means skewed by a corporation’s dimension or disclosure custom – parts that will affect many alternative ESG datapoints.
By default, we think about agency revenues, nevertheless the place this does not work properly, we decide additional relevant choices, harking back to functionality mix (utilities), market composition (telecommunications suppliers), or lending portfolio (enchancment banks).
As patrons wanting all through our portfolios, we require fixed info, which comes from using an auditable, rules-based technique comparatively than companies’ private determinations of SDG alignment.
Spherical 1 / 4 of the companies we analyse are categorised as having higher than 10% SDI contribution, as confirmed in Decide 3.
SDI earnings info is now provided on a quarterly basis to reflect changes inside the universe lined. Clients can observe how the proportion and stage of revenues coming from companies’ SDI companies change, which can feed into funding alternative and stewardship processes to reinforce the SDG alignment of portfolios.
Decide 3. Proportion of SDI-aligned equity and glued earnings issuers inside the classification (as of December 2022)
Unfavourable contributions to the SDGs
Based totally on early particular person recommendations, and drawing on current commerce apply andOrganisation particulars
Establish: Sustainable Progress Investments Asset Proprietor Platform (SDI AOP): APG | Australian Super | British Columbia Funding | PGGM
Signatory type: Asset householders, funding managers
HQ location: Netherlands
Complete blended AUM: €1 trillion
Coated on this case study
Asset classes: Equities, fixed earnings
Funding space: World
As asset householders that aim to hurry up sustainable funding outcomes for our beneficiaries, we would have liked to develop a solution that may translate the UN Sustainable Progress Targets (SDGs) into an investable framework applicable for all asset classes.
In 2020, we collaborated to create the Sustainable Progress Investments Asset Proprietor Platform (SDI AOP). Working with our prospects, we’re making a family of merchandise – centred spherical a taxonomy – that concentrate on companies’ companies, using revenues and totally different publicity metrics, to provide clear, quantitative datapoints on SDG contributions[1].
Why we think about SDG outcomes
We use the SDGs as a holistic lens to view how aligned our holdings are with the sustainability targets set by governments. As additional belongings are allotted in course of achieving the SDGs, we anticipate that corporations that will ship the choices required to satisfy them will experience earnings progress.
We wanted to establish the SDI AOP Taxonomy to find out funding options that will make a optimistic contribution to the SDGs. We deliberately focused on whether or not or not corporations are primarily aligned with the SDGs by the use of financial metrics and core outputs. Sustainability outcomes is an area that has often obtained a lot much less consideration than typical ESG metrics on risks, controversies, compliance, and operational effectivity, nevertheless our purchasers and beneficiaries have increasingly more confirmed their curiosity in supporting the SDGs.
How we think about SDG outcomes
To create the SDI AOP Taxonomy, our funding teams systematically went by way of the SDG sub-targets and metrics to find out sorts of companies or merchandise that may be instantly linked to the SDG outcomes, as confirmed in Decide 1.
Decide 1. Occasion of the taxonomy of companies developed for SDG 3
Current Fullscreen
We then labored with our info science affiliate, Entis, to classify companies providing these companies or merchandise, using info from their annual evaluations, financial evaluations, investor exhibits, internet sites, and product pages.
We use artificial intelligence and machine finding out to scale our course of and always improve the SDI dataset. For each info launch, we evaluation any supplies changes and additions to the knowledge, providing a further layer of human validation.
Caring inside the methodology’s governance helps to verify the taxonomy has a strict technique, unbiased of political or enterprise pursuits, and models a traditional which may be utilized all through portfolios and merchandise on the platform. We think about this may increasingly counter greenwashing issues which may be prevalent inside the commerce.
We determine the SDI classification of an entity based on how plenty of its enterprise is aligned with various SDGs. As confirmed in Decide 2, we classify companies which have over 10% of their enterprise contributing to an SDG as ‘decisive SDI’, whereas these with over 50% are categorised as ‘majority SDI’.
Decide 2. How we determine the SDI classification of entities
Current Fullscreen
One in every of many principal challenges of making the taxonomy dataset was to create one factor that labored at scale all through our desired universe, which has grown to spherical 9,000 equity and bond issuers and continues to develop. For example, we’re in the mean time together with extreme yield and rising markets fixed earnings safety.
Our decision was to focus on financial datapoints which may be broadly obtainable all through each sector and by no means skewed by a corporation’s dimension or disclosure custom – parts that will affect many alternative ESG datapoints.
By default, we think about agency revenues, nevertheless the place this does not work properly, we decide additional relevant choices, harking back to functionality mix (utilities), market composition (telecommunications suppliers), or lending portfolio (enchancment banks).
As patrons wanting all through our portfolios, we require fixed info, which comes from using an auditable, rules-based technique comparatively than companies’ private determinations of SDG alignment.
Spherical 1 / 4 of the companies we analyse are categorised as having higher than 10% SDI contribution, as confirmed in Decide 3.
SDI earnings info is now provided on a quarterly basis to reflect changes inside the universe lined. Clients can observe how the proportion and stage of revenues coming from companies’ SDI companies change, which can feed into funding alternative and stewardship processes to reinforce the SDG alignment of portfolios.
Decide 3. Proportion of SDI-aligned equity and glued earnings issuers inside the classification (as of December 2022)
Unfavourable contributions to the SDGs
Based totally on early particular person recommendations, and drawing on current commerce apply and