This way, the issue of ‘impact washing’ could be avoided. “Here we factor in geographical capital expenditures and ruralness as we attempt to assess what share of revenues companies get from unconnected rural areas,” says Terhi Halme, senior sustainability specialist at APG. The real-world impact of such investments could be questioned, as most Western consumers already have affordable access to such products anyway.įirms that derive a larger proportion of their revenues from developing countries could therefore be considered as having a higher impact than those that are mainly active in developed markets.ĪPG says it considers the “geographical context” in some industries, such as telecommunication. However, the real-world contribution of firms to the SDGs is probably lower than indicated by the model.įor example, sanitary products for Western consumers are regarded as contributing to SDG 3. Westerdijk indicated it is not yet possible to quantify the total contribution to the SDGs of the 1,800 firms that were identified as SDIs. SDG 7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation and Infrastructure) and SDG 2 (Zero Hunger) account for most of the additional contributions (see chart). According to Westerdijk, almost half of the impact (46%) of global listed companies is on SDG 3: Global Health & Well-Being. As a consequence, some SDGs are more investable than others. Obviously, the SDGs were not developed as a tool for investors. Kruse could not say, however, what the minimum confidence level of investment is in order for it to count as a sustainable development investment or SDI. She adds: “Once we have validated SDIs with low initial confidence levels, these also count towards our SDI exposure.” Kruse says APG pays “extra attention” to such investments, where the data cannot be immediately extracted from the financial reports. “Therefore we use a confidence measure between one and five stars, which tells you how reliable an assessment is,” he says, adding it is up to the end-investors to determine whether they consider firms with a lower SDI confidence score as impact investments. “Though most companies are quite specific in reporting their revenues from specific products, some are indeed vague.” Westerdijk admits not all firms are sufficiently granular in their reporting to get a reliable picture of their contribution. “With the help of artificial intelligence tools such as natural language processing, we analyse public documents such as annual reports to identify how much revenue these firms generate by selling products and services that have been classified as SDI-positive,” explains Machiel Westerdijk, co-founder of Entis.Īs a result of this analysis, a score between 0-100% is assigned to firms to show the extent to which they are seen as contributing to the SDGs. Artificial intelligenceĭata analytics firm Entis, which is majority-owned by APG since 2018, developed a model to determine the specific contribution of each company to the SDGs. To this end, APG and its three founding partners drew up a list of 151 product categories, ranging from wind turbines to fire protection solutions, that they believe contribute to the SDGs. The goal of the initiative is to develop a single methodology to measure the contribution of the products and services sold by listed companies to the SDGs. So far 1,800 of these firms have been identified as contributing to one or more of the 17 SDGs.Ī Sustainable Development Investment (SDI) is a company that according to the platform’s methodology contributes positively to the SDGs through its products and services.ĪPG hopes the SDI platform, the first of its kind in the world, will reach “a critical mass of investors who together define the meaning of investing in SDGs,” Claudia Kruse, managing director global responsible investment at APG, told Impact Investor. The purpose of the new platform is to map the contribution of around 8,000 listed companies to the UN Sustainable Development Goals (SDGs) using artificial intelligence. So far 1,800 of these firms have been identified as contributing to one or more of the 17 SDGs.ĪPG launched its new SDI Asset Owner Platform, together with its three founding partners PGGM, AustralianSuper and British Columbia Investment Management, in September of last year.
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