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Amanda Young, Head of Global ESG Investment Research at Aberdeen Standard Investments, explains how the UN Sustainable Development Goals provide an ideal impact investment framework for the Global Sustainability Trust
The United Nations’ Sustainable Development Goals (UN SDGs) are integral to the aims and investment focus of the Global Sustainability Trust. Can you explain a bit about them?
The UN SDGs are a collection of 17 global goals set in 2015 by the United Nations General Assembly as part of its 2030 Agenda for Sustainable Development. They aim to address the world’s biggest social and economic development challenges such as climate change, social inequality and unsustainable consumption.The SDGs are a successor to the UN’s Millennium Development Goals. But whereas the Millennium Development Goals were set up for the developing world, the SDGs are firmly focused on tackling challenges that affect everyone - and which every country needs to address. Because of that universality, they have already gained real traction in a very short space of time and captured the imagination of governments and individuals.
What’s the role of investment in addressing the UN goals?
All 193 member countries of the UN signed up to the SDGs in 2015 and some governments - particularly in Scandinavia - are using them to drive policy. But governments are acutely aware they can’t solve problems like water sanitation, social inequality or resource scarcity on their own. In fact, a $3 trillion sustainability ‘financing gap’ has been identified. So it’s essential that business and the investment community work alongside governments to help channel large-scale capital to where it’s required. That’s creating a huge opportunity for investors who want to use their capital not only to generate a return but to deliver a clear positive impact in the world as well.
How are you using the UN SDGs as an investment framework for the Global Sustainability Trust?
Our approach is the same as for our open-ended impact fund, the Global Equity Impact Fund, which Aberdeen Standard Investments launched in October 2017.
The UN SDGS were created for civil society and governments so are not directly investable - plus 17 goals adds a layer of complexity. So for investment and portfolio construction, we’ve grouped the 17 SDGs into eight ‘impact pillars’. These pillars are Circular Economy - which addresses resource re-use and efficiency, Sustainable Energy, Food & Agriculture, Water & Sanitation, Health & Social Care, Financial Inclusion, Sustainable Real Estate & Infrastructure, and Education & Employment.
We seek out assets with an intentional business model to deliver a positive impact on one or more of these eight pillars. So, for example, for financial inclusion, we might consider a company delivering mobile-phone based banking in Africa. In food and agriculture, we look for ventures that are innovating specific mechanisms to improve yield but also enhance nutrition. In health and social care, we are typically looking for companies that are finding ways to deliver services to those who can’t normally afford them.
By allocating investment against these eight pillars, we can build a portfolio that addresses the 17 UN Sustainable Development Goals in a very integrated way. Plus they keep us firmly on track as to the impacts we are looking to achieve.
How will you report on your progress against the UN’s goals?
Again, we will look to report against our eight impact pillars and we will look to put our progress in global context. So for example, under the financial inclusion pillar, we’d look to say “our investments have helped to reduce the number of underbanked individuals in a certain country from X to Y”. That’s more useful than saying “We have helped to create Z number of bank accounts” which doesn’t really tell you what impact you’ve had.
Measuring the social or environment impact of an investment as well as its financial performance is all very new - so reporting is likely to evolve a lot in the next few years.
Do you think the UN’s goals are resonating with investors - do people want to commit capital to support them?
We are definitely seeing a huge shift in capital that’s indicative of a global desire to take real and decisive action on the world’s biggest challenges.
It’s no longer acceptable to make money at the expense of the planet. More and more investors want to channel their money where it can have a positive impact - not just move it away from companies creating a negative impact.
The beauty of a fund like the Global Sustainability Trust is that we can bring large-scale capital to the smaller players that are creating change in the world. It’s about financing the world in a different way - and, without question, we think this is the direction that investing has to go.
Important Information
Risk factors you should consider prior to investing:
• The value of investments and the income from them can fall and investors may get back less than the amount invested.
• Past performance is not a guide to future results.
• The Company’s investment portfolio may not achieve the desired positive measurable environmental and/or social impact.
• The Company’s investments are inherently illiquid.
• Investment in the Company may not be appropriate for investors who plan to withdraw their money within 5 years.
• There is no guarantee that the market price of the Company’s shares will fully reflect their underlying Net Asset Value.
• An investment in the Company is only suitable for investors who are capable of evaluating the merits and risks of such an investment
? and who have sufficient resources to bear any loss which might result from such an investment.
• The success of the Company will depend, amongst other things, on the Investment Manager’s ability to identify, acquire and realise investments in accordance with the Company’s investment objective and policy. This, in turn, will depend on the ability of the Investment Manager to apply its investment processes in a way which is capable of identifying suitable investments for the Company to invest in. There can be no assurance that the Investment Manager will be able to do so or that the Company will be able to invest its assets on attractive terms or generate any investment returns for Shareholders or avoid investment losses.
The Company is an alternative investment fund for the purposes of the AIFM Directive and has appointed Aberdeen Fund Managers Limited as its alternative investment fund manager.
Domicile and legal form: The Company - The Global Sustainability Trust plc was incorporated and registered in Scotland on 17 April 2018 as a public company limited by shares under the Companies Act with registered number SC594582.
Typical investor
The Directors believe that the typical investors for whom an investment in the Company is appropriate are private investors and institutional investors investing for capital growth and seeking exposure to a diversified global portfolio, primarily consisting of Private Market Investments, which aims to create positive measurable environmental and social impact. An investment in the Company is only suitable for persons capable of evaluating the risks and merits of such an investment and who have sufficient resources to bear any loss which may result from the investment. Potential investors should consider with care whether an investment in the Company is suitable for them in the light of their personal circumstances and the financial resources available to them.
Investors may wish to consult an independent financial adviser who specialises in advising on the acquisition of shares and other securities before making an investment.
The AIFM and Investment Manager
Under the terms of the Management Agreement, the Company has appointed Aberdeen Fund Managers Limited as the Company’s alternative investment fund manager for the purposes of the AIFM Directive. The AIFM has delegated portfolio management to Standard Life Investments Limited as Investment Manager.
Other important information:
Issued by Aberdeen Asset Managers Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Registered Office: 10 Queen’s Terrace, Aberdeen AB10 1XL. Registered in Scotland No. 108419.
An investment company should be considered only as part of a balanced portfolio. Under no circumstances should this information be considered as an offer or solicitation to deal in investments.
Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments.
We recommend that you seek financial advice prior to making an investment decision.
For more information, please visit http://www.globalsustainabilitytrust.co.uk/
