The United Nations’ 17 Sustainable Development Goals seek to end poverty, protect the planet, and ensure that by 2030, all people enjoy peace and prosperity. They cover sustainability-related topics such as inequality and climate change. On the 10th anniversary of their launch, Berenice Lasfargues looks at progress on their implementation and the usefulness of the SDGs for investors.
Goals for sustainable development
The Principles for Responsible Investing, the largest global responsible investment initiative, notes the SDGs act as ‘the globally agreed sustainability framework’.
The PRI argues failure to fulfil the SDGs will create risks for investors; achieving them will drive global economic growth, provide investment opportunities, broaden investor frameworks assessing environmental, social and governance (ESG) risk and make these frameworks more comprehensive.
However, according to the UN Sustainable Development Goals Report 2025, while global commitment to the SDGs remains strong, rising geopolitical tension, global inequalities and the impact of climate change mean that less than 20% of the SDGs targets are currently on track.
As for tackling climate change, progress has been limited, too. Support from developed countries for the ‘global south’ – developing countries widely affected by the effects of rising global temperatures — has been lukewarm. A commitment expected from the COP30 climate summit of $300 billion per year is well below the estimated $1.3 trillion needed.
Similarly, the loss and damage fund to compensate for irreversible climate impacts has been slow to get off the ground.
Looking ahead, this year’s International Conference on Financing for Development and the World Summit for Social Development could give progress on the SDG agenda another push.
Critics have argued it is time to reform the SDGs. Ten leading sustainability governance experts have called for four key changes in the implementation of the SDGs:
- High-income countries should provide stronger financial commitments
- Review sessions should be introduced to help adapt the goals to evolving challenges
- Action should be taken to ensure parts of the SDGs become binding under international law
- The SDGs should have more prominence in government decision-making.
Source: https://sdgs.un.org/goals
SDGs for investors
According to the PRI, whose signatories have a combined $128 trillion in assets under management2, investors can benefit from looking at investments through an SDG lens as this can help them:
- Identify untapped opportunities within corporate business models, supply chains and services
- Anticipate potential legal and regulatory developments related to sustainability
- Protect their own reputations
- Help them fulfil and communicate their sustainability commitments to clients
- Consider transition and financial system risks over the long term
- Minimise negative investment outcomes, while increasing positive ones.
While SDG thematic investments and impact investments might look similar, impact investing has a singular focus on intentionality, additionality and impact management. Impact investors often use the SDGs as a framework.
There are also SDG impact investing strategies. An example would be a strategy using SDG 10.7 (on inequality) as a screening tool to invest in companies that provide relief to refugees.
SDGs and opportunities
A 2024 European Securities and Markets Authority (ESMA) report identified 187 SDG impact funds. It noted the size of SDG impact funds had tripled between 2020 and 2021. Of these funds, 44% were launched after 2020. This segment remains small in the EU and had assets under management worth €74 billion as of September 2023 – that is less than 1% of the total EU fund industry.
At the same time, the UN Commission on Trade and Development (UNCTAD) estimates that fulfilling the SDGs will need an annual investment of $5 trillion to $7 trillion between 2015 and 2030. Government spending and development assistance is expected to contribute no more than $1 trillion of this each year, meaning that private sector involvement is crucial. And according to the 2025 Sustainable Development Report, the SDG investment gap in developing countries is now $4 trillion annually.
Despite inadequate progress on many goals, the years since 2015 have seen improvements in areas including ‘access to basic services and infrastructure, including mobile broadband use’ (SDG 9), ‘access to electricity’ (SDG 7), ‘internet use’ (SDG 9) and ‘child mortality’ (SDG 3).
Challenges linked to the SDGs
A 2023 analysis published in the Stanford Social Innovation Review found many companies engage with the SDGs mainly for PR and reporting reasons in ways that can lead to ‘SDG washing’.
The report identified a small number of companies that managed to effectively integrate the SDGs into their corporate strategies and found three best practices which involved:
- Aligning the SDGs with revenues
- Integrating SDGs in corporate purpose statements
- Innovating and partnering to boost SDG impacts.
Last July, France’s financial regulator, Autorité des Marchés Financiers, warned of ‘major greenwashing risks’ after it analysed 52 sustainable thematic funds. It identified ‘inadequacies’ in the compliance with national rules for ESG terms in fund names and called for managers to ensure such funds are marketed in ways that are ‘correct, clear and not misleading’.
Of the funds analysed, 28% violated minimum standards introduced by the AMF in 2020. The report highlighted references to the SDGs as of particular concern. It warned references to products’ contributions to the goals could be ‘vague and imprecise’ and were open to ‘interpretation and subjectivity’.
The AMF’s conclusions were in line with the findings of the 2024 ESMA report cited above. It found SDG funds were no more aligned with the UN goals than non-SDG funds.
Next: harmonisation and consistency
The lack of data on a company’s contribution to the SDGs is often cited as an impediment to the broader adoption of SDGs by investors. Providers such as ISS, MSCI, and SDI AOP have started developing solutions looking at companies’ relationship with the SDGs either from an operational or product and service perspective, or both.
As is par for the course with the broader ESG data market, these solutions lack in harmonisation and consistency, making it important for investors to conduct their own due diligence to find the solution that fits their investment needs best.
We believe that to boost the relevance of SDGs as a framework for investors, high-quality ‘investment-useful’ data is essential. In the absence of standards, we have surveyed the data provider landscape and identified meaningful gaps in the way the SDGs are addressed.
As a result, we partner with Danish fintech Matter on our own methodology. The resulting output powers our definition of sustainable investment and is used as a framework for some of our thematic and impact investment strategies.
