Leading CFOs launch global SDG initiative with United Nations Global Compact
Dozens of Chief Financial Officers (CFOs), representing a combined $1.7 trillion in market capitalization, announced an initial commitment to collectively invest more than $500 billion towards the Sustainable Development Goals (SDGs)—and launched with the UN Global Compact a coordinated campaign to recruit hundreds of companies to adopt similar strategies and commitments.
The announcement took place during a special UN Global Compact event—Uniting Business LIVE—at the start of the 76th session of the UN General Assembly in New York.
A group of CFOs from 60 companies currently part of the UN Global Compact CFO Taskforce have committed to invest more than $500 billion over the next five years towards the SDGs as they work both collectively and within their organizations to promote further integration of the SDGs in corporate finance.
They also committed to link close to 50 percent of all corporate financing to sustainability performance, with plans to issue hundreds of billions in new sustainable finance instruments, including sustainability-linked bonds. These initial financial commitments are likely to increase further as the UN Global Compact CFO Taskforce seeks to recruit hundreds of UN Global Compact participating companies to radically scale up the amount of corporate investment aligned to sustainability goals and outcomes.
If successful, such a global movement of finance chiefs and their corporations could potentially mobilize trillions of investment dollars annually in support of the Sustainable Development Goals—in areas such as sustainable infrastructure; renewable energy; water; health; food and agriculture; gender; and decent work.
“With this commitment we set a necessary milestone on a journey which began in December 2019 when a small group of CFOs started working together towards a vision of boosting the integration of sustainability within business operations,” said Alberto De Paoli, CFO of Enel and Co-Chair of CFO Taskforce who spoke during the event. “Now, we aim to increase awareness even further and help create the necessary environment to attract more capital towards sustainable development.”
Scott Mather, CIO of U.S. Core Strategies at PIMCO and Co-Chair of the CFO Taskforce, said: “The demand for sustainable investment is growing among our clients and we are encouraged by the proactive stance that companies are taking to bring investment opportunities to the market. The CFOs in our Taskforce can already be credited with key developments in the market for sustainability-linked bonds and we expect their leadership to support growth in the sustainable debt market, potentially reaching between $10 to $20 trillion in the next five years.”
Sanda Ojiambo, CEO & Executive Director of the UN Global Compact said: “The impacts and risks presented by the pandemic reinforce the case to align more global finance in support of a more sustainable and inclusive world and to achieve the 2030 Agenda. With our efforts to recruit more participants from the UN Global Compact to our CFO Taskforce, we believe we can leverage trillions of dollars of corporate finance towards the Sustainable Development Goals.”
As the Covid-19 pandemic continues to impact societies and economies, progress towards the SDGs is in danger of slowing – and even reversing with poverty expected to rise for the first time in more than twenty years. Even prior to the pandemic, the UN estimated that the world would need to spend between $3 trillion and $5 trillion annually to meet the SDGs by 2030. The pandemic has increased the so-called SDG Financing Gap, perhaps adding an additional $2 trillion annually, according to some estimates.
Globally, the World Bank estimates that companies spend close to US$ 17.5 trillion annually on general corporate investments, with half of this directed towards emerging markets. The goal of the UN Global Compact CFO Taskforce is to radically scale up the amount of corporate investment aligned to sustainability goals and outcomes, while at the same time creating a global mainstream market in new sustainable finance instruments, including SDG Bonds.
To drive the commitment of billions, and potentially trillions of corporate finance towards the SDGs, the UN Global Compact CFO Taskforce has created a comprehensive management and governance framework, The CFO Principles for Integrated SDG Investments and Finance.
In this framework, companies are encouraged to create their unique impact thesis and set their own KPIs and targets to track performance on the most relevant SDGs for their business. So far 71% of companies in the Taskforce have taken that step in support of the CFO Principles which covers SDG impact thesis and measurement; SDG strategy and investments; corporate SDG finance and SDG communications and reporting. Sixty-one percent of companies in the Taskforce publicly disclose their SDG KPIs and targets, while 59 percent integrate the SDGs in their investor communication, and 55% publish an integrated report.