One question, 5 themes
When we consider a company’s impact, we set out to answer one question: Is this company contributing to the economic shift needed to achieve the United Nations’ 17 Sustainable Development Goals (SDGs)?
The SDGs: a framework for systems change
The SDGs are a plan to promote prosperity while protecting the environment. The 17 interconnected goals set out how to deliver global sustainable development. While governments have developed the goals and signed up to their implementation, government action alone will not be enough to achieve them; private investor capital is needed and indeed the SDGs aim to foster collaboration within and between international private and public stakeholders.
The SDGs help investors like us identify areas where capital can address the world’s biggest problems. They have become a universal framework for impact investing. Given their ubiquity, the SDGs are well positioned to help bring about systems change.
While the SDGs are used globally as a framework when impact investing, there is no universally agreed way to apply them directly to investment decisions because they do not specify in of themselves where investment capital should be directed. To translate the SDGs into action, we mapped all 17 to five investable themes, each containing several investment areas, which we use to screen and evaluate companies and then measure, manage and report on impact.
INVESTABLE THEME 1
Sustainably Meeting Basic Needs
This is about access to resources for long-term human well-being. Investment areas in this theme include Sustainable, Nutritious and Humane Food Systems and Disease Prevention and Response.
This theme is aligned with five of the SDGs.
INVESTABLE THEME 2
Empowering the Structurally Excluded
This is about reversing structural inequalities. Investment areas in this theme include Gender and Minority Representation and Empowerment; and Access to the Digital Economy.
This theme is aligned with five of the SDGs.
INVESTABLE THEME 3
Addressing Climate Change
This is about altering the energy economy and replenishing carbon stores. Investment areas in this theme include energy efficiency and sustainable transport and logistics.
This theme is aligned with two of the SDGs
INVESTABLE THEME 4
Sustainable Use of Natural Capital
This is about conserving, restoring and preserving natural resources to nurture ecosystems and foster resilience. Investment areas in this theme include renewable and Sustainably Sourced materials, and water and Resource efficiency and Sustainability.
This theme is aligned with three of the SDGs.
INVESTABLE THEME 5
This is about building the foundations to create transparency and equal opportunity for a more just and resilient society. Investment areas in this theme include democratized employment and Payments infrastructure and fraud prevention.
This theme is aligned with two of the SDGs.
Investing in companies that help achieve the SDGs is about more than just doing the right thing for society, it’s also a smart investing strategy.
SDGs are important because they help:
The Business and Sustainable Development Commission estimates that achieving the SDGs could produce over US$12 trillion in new market opportunities in areas such as food, agriculture, cities, energy, materials, health and well-being and could create over 380 million jobs.
Avoid Risk, Find Resilience
Many companies are now expected to consider the SDGs as part of their overall decision-making, with growing recognition that continuing the practice of externalizing costs would expose them to policy and reputational risks. The SDGs provide a framework for analyzing the externalities that companies should internalize to be more resilient to future crises, more stringent regulations, growing societal pressures and stakeholder capitalism.
Through direct engagement and allocation of capital investors can collectively push companies for more positive impact and improvement towards the commonly understood SDGs.
Corporate revenues and operations can be assessed, measured, and mapped based on which SDGs they impact favourably or adversely.
“Rally Assets has been an important partner to us as we endeavour to explore impact investing, and expand the ways in which we deploy our assets in pursuit of positive change. Their research reports and investment guidance are second to none.”
Jim McGill, Peter Gilgan Foundation
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