Many companies in SDG funds receive more than 75% of their revenues from countries in the top quartile of the SDG Index
Clarity AI, the leading global sustainability tech platform, released new research today that highlights a significant gap between the intentions of Sustainable Development Goal (SDG) funds and their impact in countries with the greatest need for sustainable development. On average, companies in SDG funds sell only 1% of their products and services in these countries.
The SDG Index, a valuable tool for evaluating countries’ progress towards the SDGs, demonstrates that different countries are at varying stages of advancement towards achieving the SDG targets. The index highlights the need for increased efforts and resources in countries with lower scores, which are further away from achieving the SDGs. The findings of the new research, which is based on an assessment of the SDG Index, emphasize the urgency for investors and asset managers to align their investments with areas requiring the most attention.
“The goal of SDG funds is to invest in companies that contribute to solving the SDGs, but our research shows a disconnect between investment focus and country needs,” said Lorenzo Saa, Chief Sustainability Officer at Clarity AI. “To maximize the impact of SDG funds and effectively contribute to global development, it is crucial for investors and asset managers to gain visibility into the areas where companies are selling their products and services that contribute to the SDGs.”
Furthermore, the distribution of revenues generated by companies in SDG funds does not align with the needs of countries lagging in SDG progress. On average, companies in SDG funds receive more than 75% of their revenues from countries in the top quartile of the SDG Index, indicating a flow of funds to already well-performing nations. Alarmingly, even the fund with the highest average revenue from countries in greatest need has only 5% of its index-included companies’ revenues coming from these countries.
Strategic and responsible investment in SDG funds has the potential to generate greater positive impact and drive transformative change. By aligning investments with countries striving to achieve the SDGs, investors can contribute significantly to global sustainable development.