ESG and the Global Goals: How to Invest in Companies that Contribute to the United Nations' Sustainable Development Goals #SustainabilitySaturdays

The global community has acknowledged the need for sustainable development to ensure that the needs of the present generation are met without compromising the ability of future generations to meet their own needs. In 2015, the United Nations General Assembly adopted the 2030 Agenda for Sustainable Development, a blueprint for peace, prosperity, and the planet, consisting of 17 Sustainable Development Goals (SDGs) and 169 targets. The SDGs aim to end poverty, protect the planet, and ensure prosperity for all. Companies that contribute to the SDGs play a crucial role in achieving these objectives, and their investment potential has increasingly become a topic of interest for investors looking to align their investments with their values. Environmental, Social, and Governance (ESG) investing has emerged as a popular way for investors to identify companies that contribute to the SDGs while achieving financial returns.

ESG and the Global Goals:

#ESGinvesting considers a company's environmental, social, and governance performance in addition to traditional financial metrics. By integrating ESG factors into the investment process, investors can identify companies that are better positioned to manage risks and opportunities related to sustainability issues. Companies that contribute to the SDGs are often seen as more sustainable, and thus, more attractive to ESG investors.

The SDGs provide a framework for companies to align their strategies with sustainable development and identify areas where they can make a positive impact. Companies can contribute to the SDGs by addressing social and environmental challenges in their operations, products, and services. For example, companies can contribute to SDG 7, Affordable and Clean Energy, by investing in renewable energy or energy efficiency projects. Companies can also contribute to SDG 8, Decent Work and Economic Growth, by creating jobs and promoting economic development in underserved communities.

Investing in companies that contribute to the SDGs can generate positive social and environmental impacts while also achieving financial returns. A study by the Global Impact Investing Network (GIIN) found that impact investing, which aims to generate positive social and environmental impacts alongside financial returns, can achieve market-rate returns or better. The study also found that impact investors were able to achieve their intended impact in over 90% of investments.

Examples in Kenya:

Kenya has made significant progress in promoting sustainable development, with a focus on the SDGs. The Kenyan government has incorporated the SDGs into its development agenda, with the aim of achieving a sustainable, equitable, and prosperous society by 2030. Kenya's private sector has also embraced the SDGs, with many companies incorporating the goals into their business strategies.

One example of a company in Kenya that contributes to the SDGs is M-KOPA Solar, a company that provides pay-as-you-go solar energy to off-grid households in Kenya, Uganda, and Tanzania. M-KOPA Solar's business model aligns with SDG 7, Affordable and Clean Energy, and SDG 13, Climate Action. By providing affordable and clean energy, M-KOPA Solar is contributing to poverty reduction, improving health outcomes, and reducing carbon emissions.

Another example is Bboxx, a company that provides solar home systems to off-grid households in Africa and Asia. Bboxx's business model aligns with SDG 7, Affordable and Clean Energy, and SDG 13, Climate Action. Bboxx has operations in several African countries, including Kenya, Rwanda, and Togo.

Kenya Commercial Bank (KCB) is another company that contributes to the SDGs. KCB is one of the largest banks in Kenya and has incorporated the SDGs into its business strategy. The bank has identified six SDGs that it aims to contribute to, including SDG 5 , Gender Equality, and SDG 8, Decent Work and Economic Growth. KCB has launched several initiatives to support these goals, such as providing financial services to small and medium-sized enterprises (SMEs) and supporting women's entrepreneurship.

Investors looking to invest in companies that contribute to the SDGs in Kenya can consider investing in impact investment funds such as Novastar Ventures and Acumen East Africa. These funds focus on investing in companies that address social and environmental challenges in Africa, including in Kenya.

Examples in Africa:

In addition to Kenya, many other African countries have made significant strides in promoting sustainable development and incorporating the SDGs into their development agendas. Companies across the continent are also contributing to the SDGs, creating investment opportunities for ESG investors.

One example of a company in Africa that contributes to the SDGs is M-Pesa, a mobile money transfer service provided by Safaricom, a telecommunications company in Kenya. M-Pesa has revolutionized financial inclusion in Kenya, allowing millions of people who were previously excluded from the formal financial system to access financial services. By providing access to financial services, M-Pesa is contributing to SDG 1, No Poverty, and SDG 10, Reduced Inequalities.

Another example is Twiga Foods, a company based in Kenya that provides a mobile-based platform for the sourcing, purchasing, and delivery of fresh produce to informal retailers. Twiga Foods has been able to create a more efficient supply chain for fresh produce, benefiting both farmers and retailers. By improving the efficiency of the food supply chain, Twiga Foods is contributing to SDG 2, Zero Hunger, and SDG 8, Decent Work and Economic Growth.

Investors looking to invest in companies that contribute to the SDGs in Africa can consider investing in impact investment funds such as Investisseurs & Partenaires and LeapFrog Investments. These funds focus on investing in companies that address social and environmental challenges in Africa, including in Kenya.

Conclusion:

Investing in companies that contribute to the SDGs can generate positive social and environmental impacts while also achieving financial returns. ESG investing provides a framework for investors to identify companies that are better positioned to manage risks and opportunities related to sustainability issues. Kenya and other African countries have made significant progress in promoting sustainable development and incorporating the SDGs into their development agendas. Companies across the continent are also contributing to the SDGs, creating investment opportunities for ESG investors.