APG Asset Management, together with, AustralianSuper, British Columbia Investment Management Corporation (BCI) and PGGM in 2020, jointly established the Sustainable Development Investments Asset Owner Platform (SDI AOP). This platform helps to accelerate investments to deliver on the Sustainable Development Goals and thereby support investment outcomes for end beneficiaries. As asset owners, we are creating a community of investors who are jointly advancing the SDI AOP standard for investing into the UN Sustainable Development Goals SDGs. The SDI AOP aspire to drive innovation in the investment industry with the standard being made available to all market participants.

Solving data challenges

Global investors increasingly consider the SDGs relevant to their investment strategy, policy, asset allocation, investment decisions and active ownership, according to research by the Principles for Responsible Investment (PRI). However, a lack of quality data to identify contributions to the SDGs has been an impediment for investors, and companies struggle to adapt their disclosures to meet investor needs. By providing a globally consistent SDG measurement framework, the SDI Asset Owner Platform helps investors to imbed the SDGs into their investment processes.

Shared understanding of Sustainable Development Investments (SDIs)

The SDI AOP allows asset owners and their managers to connect around the shared objective of measuring and understanding their portfolio investments’ contributions to the SDGs. These goals, set by the United Nations in 2015, aim for a better, more prosperous world, by addressing urgent global issues such as water scarcity, healthcare access, and protecting the environment. Investments in companies whose products or services contribute to the realization of the SDGs are called Sustainable Development Investments (SDIs).

Using AI to quantify contribution of investments to SDGs

To ensure alignment with the United Nation Sustainable Development Goals and quantify the contribution of an investment to such goals, the SDI Asset Owner Platform developed an SDI Methodology which consists of:

  1. detailed taxonomies and guidelines
  2. a methodology to define the classification of the SDIs
  3. SDI classifications
  4. the rating methodology of SDI classifications

To translate the SDI taxonomy into a classification system to determine whether a given company is or is not SDI eligible, we partner with Entis, a data and software technology firm (in which APG is shareholder). Entis uses natural language processing of structured and unstructured data (annual reports, trade descriptions and website text) to determine the SDI status (Majority, Decisive, Non-SDI), SDI Confidence, SDI Revenue Percentage and Main SDGs for each company. Entis currently covers 8,700 entities (equities & bonds).

Ability to report transparent and consistent data

For the SDI AOP, the primary focus is on companies’ positive contribution to the SDGs through their products and services (the ‘what’), whereas for ESG is typically focused on conduct (the ‘how’). For example: making solar panels (SDI) versus having operational policies, management systems, targets and disclosure in place (ESG). This enables investors to assess their global capital markets’ portfolios on their contribution to the SDGs and to report to clients and external stakeholders transparently and consistently, using a common and auditable standard. The SDI definition and taxonomy are public and equally applicable to private market investments. Qontigo is the global financial services company that is the distributor of the SDI AOP standard, and current subscribers to the SDI AOP represent EUR 9.500 billion assets under management.