5.4 Private capital attraction tools

SDG Impact Standards

Finding 12. The current UNDP focus on setting Impact Standards for the Sustainable Development Goals to guide management practices in private capital markets largely duplicates the work of other agencies, with little value added for leveraging finance for the Goals.

The SDG Impact Standards are aimed at integrating the SDGs into decision-making standards, rather than reporting or operating standards. To cite the language used to explain the initiative: the standards “are decision-making standards, not performance or reporting standards. They are designed to help organizations integrate operating responsibly and sustainably and contributing positively to sustainable development and the SDGs into organizational systems, investment frameworks and decision-making practices” and are “for all Enterprises, Bond Issuers and Private Equity Funds committed to operating sustainably.” 164 The project is also presented as ‘useful guide’ for an extensive range of other actors, including Governments, policymakers, analysts, investors and others. While principally presented as a management approach, the Impact Standards approach is also framed as a best-practice guide to investment practices (for example, in the OECD-UNDP Impact Standards for Financing Sustainable Development).165

The UNDP SDG Impact group has three main pillars of work: (1) impact management, which involves the development of SDG impact standards, impact assurance and an SDG Impact Seal available to bond issuers, equity fund managers and enterprises, as well as impact training, aiming to guide better decisions, driving investment capital to where it is needed; (2) impact intelligence, which involves the preparation of SDG investor maps and an SDG investor platform, aiming to produce data and insights needed for increasing financial flows for the SDGs; and (3) impact facilitation, including the convening of SDG impact investors, and SDG impact policy dialogues, aiming at fostering matchmaking and collaboration to realize investments.

UNDP has developed a range of SDG-related standards including for private equity funds (version 1.0 released in October 2020),166 bond issuers (March 2021)167 and enterprises (June 2021).168 UNDP reiterates that these are decision-making standards, not performance or reporting standards, that focus on embedding SDG-related considerations in “organizational strategy, management approaches, transparency and governance structures”.169 The SDG Impact team worked with the OECD to produce joint OECD/UNDP Impact Standards,170 a set of standards designed to provide donors, development finance institutions and private investors with a joint best-practice guide and self-assessment tool for integrating impact management into investment practices and decision-making. UNDP is also developing an accreditation system for independent practice assurers, an SDG Impact Seal available to bond issuers, equity fund managers and enterprises.

164 UNDP SDG Impact, ‘About the SDG Impact standards’, https://sdgimpact.undp.org/assets/About-the-SDG-Impact-Standards.pdf, accessed 28 March 2022. 165 OECD/UNDP (2021), OECD-UNDP Impact Standards for Financing Sustainable Development, OECD Publishing, Paris, https://doi.org/10.1787/744f982e-en. 166 https://sdgimpact.undp.org/private-equity.html 167 https://sdgimpact.undp.org/sdg-bonds.html 168 https://sdgimpact.undp.org/enterprise.html 169 https://sdgimpact.undp.org/assets/About-the-SDG-Impact-Standards.pdf 170 https://sdgimpact.undp.org/oecd-undp-impact-standards.html