The Bottom Line: Funds focused on investments based on their alignment with the UN’s SDGs are limited and they don’t address SDG contributions over time.
Funds focused on alignment with UN Sustainable Development Goals (SDGs)
Notes of Explanation: *On December 30, 2021, the name of the Fund changed from the iShares MSCI Global Impact ETF to the iShares MSCI Global Sustainable Development Goals ETF. Sources: Descriptions based on fund prospectuses. AUM and expense ratios: Morningstar Direct.
Observations:
- The UN Sustainable Development Goals (SDGs) are a collection of 17 global goals set by the UN Development Program that calls for the integration of economic development, social equity, and environmental protection. Adopted in 2015, the SDGs are intended to stimulate action over a period of 15 years to 2030 in areas of critical importance for humanity and the planet, including: poverty eradication, food security, health, education, gender equality, access to water, sanitation, clean energy, decent jobs, key infrastructure, strong institutions, inequality reduction, sustainable urbanization, responsible production and consumption patterns, climate change mitigation and adaptation, and ecosystem conservation.
- According to the just released Sustainable Development Report 2022 published on June 2, 2022, the world’s progress on the UN’s Sustainable Development Goals (SDGs) has declined slightly for the second year in a row. The average SDG Index score slightly declined in 2021, partly due to slow or nonexistent recovery in poor and vulnerable countries.
- Sustainable investors seeking to invest in securities via funds whose investments, in addition to varying fundamental investment factors, are chosen based on their alignment with the SDGs, have limited options. These consist of just four mutual funds and ETFs, including two actively managed funds, one equity and the other a high yield fixed income fund as well as two, passively managed, equity-oriented funds. These funds also vary as to their track records, fund sizes and expense ratios.
- Even at that, the funds focus on alignment of securities with the SDGs rather than the achievement of specific outcomes or contributions over time, and reporting on SDG contributions is not provided by any of the four funds.
