Sustainable Development Goals: the new international framework to guide investor strategy

  • Jürgen HAMMER, SPTF / Grameen Credit Agricole Foundation
  • Speakers
  • Paul Thomas KADAMBELIL, ESAF Small Finance Bank, India
  • Alain LÉVY, BNP Paribas
  • Dina PONS, Incofin Investment Management

    Moderator Jürgen HAMMER opened the session by stating that the 17 United Nations Sustainable Development Goals (SDGs) do not explicitly cover financial inclusion, but financial access is a key enabler to achieve them. New actors in the financial sector have emerged, such as impact investors, who are confronted with the dilemma of covering the impact promise of this sector without any standardised or agreed upon methodology. The SDGs have started to fill this gap. It is an internationally recognised framework and it is increasingly becoming a framework of reference for many investors, development agencies and companies/financial service providers. The aim of the session was to answer the following question: What are we doing differently now that we have the SDGs and what are the challenges for practitioners when reporting on their effective contribution to the SDGs?

    The session started with a role play where each table represented a microfinance organisation who was asked by its board to report on its contribution to the SDGs. Each table discussed how they would go about this request and after ten minutes presented their ideas. Some started with choosing which SDGs corresponded with their social mission and reported on these specific goals. Others would map their portfolio with a list of activities which contributed to specific SDGs and would write case studies on each goal. Another idea was to first draw a baseline and then collect data and monitor targets.

    After this activity, the panellists were invited to the podium to present their experiences with SDG reporting. Cécile LAPENU, from CERISE started by presenting the efforts of their working group to develop MetODD-SDG, a simple framework to allow social enterprises and MFIs to align with the international SDG agenda. According to Lapenu, the SDG framework consists of macro-level target indicators and the challenge is to make it operable for micro-level institutions. The first step to do this was to define a list of micro-indicators together with investors and social enterprises. This resulted in a framework, covering 16 SDGs with 73 out of 169 targets that are achievable by social enterprises and MFIs. A limited number of operational indicators was created, aligned with international standards, and structured in six categories from simple to more complex.

    The session continued with the visions of three different actors, a bank and two investors, on what they are doing on SDG reporting. Paul Thomas KADAMBELIL, from ESAF Small Finance Bank, highlighted that their social mission was created before the SDGs and that it is an integral part of ESAF. The bank is committed to a triple bottom line, ensuring financial inclusion with a focus on people, planet and profit. The bank developed programmes that are in line with the SDGs, for example programs focusing on children or healthcare. Investors can choose an impact area and ESAF reports on a regular basis on the impact of each loan, using the SDG framework. Kadambelil explained that they start from an SDG, then look at which products or services they offer correspond to that specific goal and report on the specific outcomes of those products or services. 

    Alain LÉVY, from BNP Paribas, explained that they experience pressure to report on their impact because these results influence the incentives they receive. Like ESAF, BNP Paribas aligned their own strategy to the SDGs. For each impact area - economy, people, community and planet - Key Performance Indicators (KPIs) are developed, corresponding with the SDGs. Each year, a target is set on what should be achieved for this specific indicator and these outcomes calculations are audited. 

    Dina PONS, from Incofin, shared her experiences as impact asset manager. As an asset manager with a social mission, Incofin believes that if you value something, you need to measure it so you can monitor, analyse and act on it. The approach of Incofin is to map the social goals of their funds and investees against the SDGs. This is different for every institution. Then the indicators that are chosen using MetODD-SDG by CERISE are used to map the SDG impact of each specific institution, using already existing data. According to Pons, Incofin does not force the SDGs in the impact conversation with investees, but uses them as a framework to guide their impact work. She warned for impact washing, it is easy to align any impact claim to an SDG, but it is important to have a methodology behind it.


    A first question from the audience was raised on what will happen with the Universal Standards on Social Performance Management (SPM), will they merge with the SDGs into one system? Lapenu answered that these two systems are complementary. The SPM standards are more process oriented and the SDGs more results oriented. Pons added that Incofin uses the SPM standards when they select investees, and for their outcomes, they use the model of CERISE. 

    Another question from the audience related to the timeframe attached to the SDGs. By 2030 the SDGs should be achieved, but how do we measure the progress? Should we create benchmarks on how we are doing? Hammer responded that this is work in progress and that this is a clear wish from investors. It is important to coordinate shared learning of investors. According to him, it is important to have a common language in order to create benchmarks. The model of CERISE is a good starting point. Pons agreed with Hammer that a benchmark would be great to track data and that it is an individual responsibility to share data. Lapenu added that simple indicators should be aligned with data on the national level to see where we stand and where we should be. The national data should give the endpoint and reference. This is more manageable than ten years ago because now, there is a standardised framework based on the SDGs and the available digital technology to collect information.