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Source: Small Island Developing States

4 September 2019: The UN Development Programme (UNDP) has released a proposed set of standards to guide private fund managers towards investments that advance the SDGs. The standards are open for comment and consultation through 4 December 2019.

The proposed standards titled, ‘SDG Impact Practice Standards for Private Equity Funds,’ aim to help the private sector move from interest in the SDGs to adopting good practice on SDG investments. The standards facilitate implementation of existing principles, and are expected to inform performance reporting and benchmarking. The standards provide practical guidance for the private sector to operationalize the SDGs using a checklist to integrate impact into private equity fund design and execution.

To encourage consistent application, the standards complement and are mapped to existing frameworks and principles for sustainable impact investment, including the UN-supported Principles for Responsible Investment, the UN Environment Programme Finance Initiative (UNEP FI) Principles for Responsible Banking, the International Finance Corporation (IFC) Operating Principles for Impact Management, Principles for Positive Impact Finance and the Global Impact Investing Network (GIIN) Core Characteristics for Impact Investors.

Mobilizing an additional 5% of global assets under management yearly in ways that take us closer to the SDGs is a realistic goal.

There are 18 standards, grouped among three categories: standards for strategic intent and goal setting; standards for impact measurement and management; and standards for transparency and accountability. To assess strategic intent and goal setting, for example, standards examine the fund’s motivations for engaging with the SDGs, determine its SDG impact intentions and its theory of change, among other areas. For each standard, there are a series of tests to assess the core elements of that standard and determine the extent to which each fund attains or does not attain the particular standard. The standards provide guidance on what each level of attainment should look like, including sample text.

The UNDP proposed standards include a tiered certification framework to recognize and differentiate good practice in the market, with an “SDG Impact Seal” that can be awarded based on achieving certification criteria. The three certification tiers aim to “meet the market where it is” and provide a structure for improvement. UNDP is inviting feedback on the proposed levels of attainment.

Elizabeth Boggs-Davidsen, UNDP SDG Impact Director, reflected that there has been strong and growing private sector enthusiasm for the SDGs but that “translating interest into action has been challenging.” She identified a need to accelerate SDG implementation, and said “mobilizing an additional 5% of global assets under management yearly (about USD 6 trillion) in ways that take us closer to the SDGs is a realistic goal.”

SDG Impact, an initiative of UNDP, developed the standards as part of a suite of services that aim to help investors to engage with SDG-enabling opportunities and differentiate impact practices through certification. Following the finalization of the standards, SDG Impact will develop UNDP Practice Standards for Bonds and Enterprises. [Publication: SDG Impact Practice Standards for Private Equity Funds: Draft for Consultation] [SDG Mapping to Principles] [UNDP Press Release] [Standards Website]

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