Implementing Sustainable Finance Principles is not a solitary endeavor but a collaborative partnership

This business brief has been compiled based on the output of the event ‘Principles on Integrated SDG Investments & Finance’ on 17 October at ABN Amro in Amsterdam. This brief will address how Sustainable Finance Principles can be effectively implemented.

The CFO Principles on Integrated SDG Investments and Finance were introduced in 2020 to expedite private sector investment for the Sustainable Development Goals (SDGs). The primary motivation for such an introduction is accelerating private investments for the needed progress in implementing SDGs. There are four CFO Principles: 1) Developing an SDG Impact thesis (theory of change) and measurement; 2) Integrating the SDG impact thesis and investment plan into the corporate strategy; 3) Developing and implementing a comprehensive corporate SDG Finance approach 4) Integrated SDG communication and reporting.

Creating your SDG impact thesis and measurement basis

For developing an SDG impact thesis, avoiding a silo approach to departmental interaction is vital. Sustainability departments should interact well with the CFO and accounting departments. This will help the organization deal with the SDGs’ complexity and financial terrain. Another crucial factor for the SDG impact thesis is that it differs from the investment thesis. Instead of prioritizing financial gain, it prioritizes SDG impact. In some areas, they might even be overlapping. For instance, carbon prices can create awareness about reducing costs and the adverse effects on climate. The impact measurement should include hard metrics consistent with SDG targets and indicators. If this impact measurement is integrated broadly within the organization, it will bring the benefit of more awareness and better coordination.

Integrating an SDG impact strategy and Investment plan

When integrating the SDG impact thesis and investment plan into corporate strategy, it is crucial not to underestimate the positive effect of involving internal stakeholders. If internal stakeholders are on board at this stage, they will better understand the SDG impact perspective and perform better when it comes to implementation. The organizations can also collaborate with external stakeholders such as suppliers and public entities. For example, an independent SDG verification of the investment plan might help realize gaps and elements to improve. External stakeholders can contribute to integrating a multiplicity perspective in capital, enhancing the corporate SDG Finance Approach. Capital is not considered solely monetary value anymore but includes skills, knowledge, community development, and environmental protection.

Communication and reporting

Finally, disclosing only what is being done is insufficient to communicate and report the SDG impact. A long-term vision, a prospect for the future, will help the organization progress further and receive public feedback. The insight from our event groups emphasize the importance of support from peers, internal stakeholders, and external partners. The organizations do not have to invent everything themselves. They can already use existing frameworks and benchmarks. Following good governance mechanisms are key to assessing the SDG activities.

Key take away

The most emphasized actions to consider for implementing Sustainable Finance Principles include collaborating with external stakeholders and including internal stakeholders at nearly every stage. Implementing Sustainable Finance Principles is not a solitary endeavor but a collaborative partnership.