KPMG survey climate change risks

25th September 2017 marked a global day of action in the support of the United Nations’ Sustainability Development Goals (UN SDGs), on the second anniversary of their inception, and came as two reports emphasised the role business and investors can have in achieving their aims.

The updated edition of Coping, Shifting, Changing, published by the UN Global Compact and the Principles for Responsible Investment provides recommendations for companies and investors that aim to mitigate some of the most serious consequences of short-termism in markets through changes in strategy and practice.

In the report’s introduction, the authors state that the SDGs provide an opportunity for business leaders, investors and companies alike to re-think their approach to value creation, serving as a blueprint for action in both capital and investment markets. The report suggests that excessive short-term pressure will hamper progress unless action is taken by both companies and investors.

The report is therefore framed around the belief that companies, with support from investors, can advance strategies that support long-term business growth and improve their impact on society and the environment. The authors state that the evidence also shows that companies that focus on the long-term perform better. Companies, therefore, need to shift to a more long-term investor base while investors need to move to supporting long-term decision-making.

Among the recommendations for investors are that they should publish an explanation of how drivers of long-term performance, including environmental, social and governance factors, are taken into account in their investment processes. Investors should also encourage companies to articulate how their business strategies and capital expenditure plans will create long-term value.

UN SDGs reports
To achieve a sustainable economy there needs to be a strategic shift by business and investors

Meanwhile, Towards a sustainable economy: The commercial imperative for business to deliver the UN Sustainable Development Goals, produced by the Cambridge Institute for Sustainability stated that in order for the SDGs to be delivered by 2030, a compelling business narrative and a systemic approach are required to help shift current thinking about economic progress towards models that
deliver sustainable development. Without this shift, business commitment is unlikely to be sustained and rewarded with commercial success, the report said.

Among the key findings of the report were that there is a strong commercial case for business to lead the shift to a sustainable economy that can deliver the SDGs as a whole. The report also suggested that delivering the SDGs would create winners and losers. The companies that adapt early and, who align products, services and practices with a sustainable economy that is capable of delivering the SDGs, have more to gain and less to lose. However, companies that move slowly could face major risks and costs.

Evidence that investors are shifting their approaches also came this week with the results of a global survey from fund manager Schroders that found that 64% of respondents said that they had increased their investment in sustainable funds over the last five years.

The survey of over 22,000 investors across 30 countries also found that 78% of respondents stated that sustainable investing is more important to them now than it was five years ago; 32% said it was significantly more important and 46% said it was somewhat more important.

Last Updated: 29 September 2017
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