Financing the SDGs: UNEP Finance Initiative and Finance for Tomorrow to work together on the Positive Impact Initiative
In September 2015, the UN General Assembly formally established 17 Sustainable Development Goals (SDGs) to be addressed by 2030, which effectively provide a common framework for public and private stakeholders to set their agendas and define their policies and strategies over the next 15 years.
$5-7 trillion a year until 2030 is needed to realise the SDGs worldwide, including investments into infrastructure, clean energy, water and sanitation and agriculture. The greater part of the necessary financing and investment will need to stem from private finance.
While a wide range of sustainable finance products and services are available in the market, these mobilise limited funds compared to what is needed and for a limited number of things – based on a pre-identification of acceptable sectors and activities. Hindered by often unattractive risk and return profiles, to-date the amount of private finance mobilised to achieve the SDGs remains in marked contrast to the scale of the needs.
The Positive Impact initiative
In October 2015 a group of banks and investors released the Positive Impact Manifesto, which calls for a new financing paradigm. As per the Manifesto, bridging the funding gap for sustainable development and the attainment of the SDGs requires a new, impact-based approach, based on a holistic consideration of the three pillars of sustainable development.
The Manifesto outlines a Positive Impact Roadmap towards to the achievement of SDG financing, which focuses on two core needs:
- A common framework to help the finance community and a broader set of public and private stakeholders identify, assess and promote positive impact activities, entities and projects.
- A collaborative, solution-building approach to developing and implementing new business models and financing approaches that will help address the SDG funding gap and realize the SDGs themselves.
The Principles for Positive Impact Finance were launched on January 30th, 2017 in Paris. More information available here.
PRINCIPLE TWO: Frameworks - To promote the delivery of Positive Impact Finance, entities (financial or non financial) need adequate processes, methodologies, and tools, to identify and monitor the positive impact of the activities, projects, programmes, and/or entities to be financed or invested in.
PRINCIPLE THREE: Transparency - Entities (financial or non financial) providing Positive Impact Finance should provide transparency and disclosure on:
- The activities, projects, programs, and/or entities financed considered Positive Impact, the intended positive impacts thereof (as per Principle 1);
- The processes they have in place to determine eligibility, and to monitor and to verify impacts (as per Principle 2);
- The impacts achieved by the activities,
PRINCIPLE FOUR: Assessment - The assessment of Positive Impact Finance delivered by entities (financial or non financial), should be based on the actual impacts achieved.
Following the launch of the Principles the members of the initiative have defined a strategy and a common workplan organised around four working groups whose role it will be to develop implementation guidance and engagement tools for financial institutions to apply a positive impact approach
As at July 10th 2017, the Positive Impact initiative is made up of the following UNEP FI members: ABN AMRO, Australian Ethical, Aviva, BNP Paribas, BMCE Bank of Africa, Caisse des Dépôts Group, Desjardins Group, First Rand, Hermes Investment Management, ING, Itaú Unibanco, Mirova, NAB, NedBank, Pax World, Piraeus Bank, SEB, Société Générale, Standard Bank, Triodos Bank, Westpac and YES Bank.
How to become involved
Participation in the Positive Impact initiative is open to all UNEP FI members that are actively seeking to understand and promote the positive impact of their portfolios on the economy, society and the environment via dedicated strategies, frameworks and business activities.
Both member and supporter status imply a public endorsement of the Positive Impact Manifesto and the Principles for Positive Impact Finance.