The SDG Impact Practice Standards for Private Equity Funds (the Standards) respond to market-identified needs and feedback from various groups engaged and interested in investment that has positive impact for people and the planet.
They form part of the United Nations Development Programme (UNDP) SDG Impact and specifically embed the notion of investment to enable achievement of the United Nations Sustainable Development Goals (SDGs). UNDP’s goal is to catalyze much-needed private capital and direct it towards the achievement of the SDGs and help connect impact driven activity with investment to significantly enhance progress toward development goals.
The Standards complement other SDG-enabling components of UNDP’s SDG Impact and other market enabling initiatives of the Impact Management Project (IMP).
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The Standards for Private Equity have been developed for Fund Managers and other industry actors as a public good to inform practice that can direct and orient investment activities towards achievement of the SDGs. They are designed to facilitate implementation of the principles frameworks already in place and inform performance reporting and benchmarking. They embed the SDGs and IMPs five dimensions within a framework for concrete actions to more fully understanding and comparing SDG related impact. The Standards will be applied to each Fund, recognising that fund managers may manage several funds that may or may not be seeking to apply these Standards
Adoption of the Standards enables users to more consistently navigate and apply concrete, practical thresholds for impact management, operationalize and implement industry frameworks and principles and inform and drive impact and financial performance.
The Standards are designed to meet the needs of new and existing actors and apply to established and innovative practice, reflecting the dynamic and growing nature of SDG-enabling impact initiatives and enterprises and investment into them.
The Standards will be valuable and useful to the market including the following groups:
Those adopting the Standards will also benefit from resources and the Certification Framework which provide guidance on practical adoption.
Increasingly, the private sector is recognising the links between sustainable development and future business performance. Governments are also recognising the importance of private and innovative finance to achieve the SDGs, including through multi-lateral initiatives of the G7 and G20.
They recognise the growing trend towards analyzing businesses and investments based on the SDGs and represent a shift from using the SDGs to map existing activities to more integrated practice directing and orienting investment towards activities that create more impact and contribute to progress toward the SDGs.
The Standards apply whether a fund manager’s intentions focus on avoiding harm that inhibits achievement of the SDGs, benefiting stakeholders in relation to one or more SDGs, and/or contributing to solutions that advance achievement of the SDGs.
The Standards are designed to provide flexibility by focusing on strong underlying practices applied within a consistent framework based on IMP’s five dimensions of impact and alignment with SDGs and associated targets. This enables the requisite consistency to be able to report on a consistent and comparable basis and reduces the tension to set metrics that are consistent but not meaningful at the underlying enterprise/project level.
A fundamental aim of the Standards is to enable the market to make informed decisions about whether and how private equity investments contribute to achievement of the SDGs through universally agreed SDG-enabling impact measurement and management practices.
The 17 interrelated SDGs provide a universal framework for addressing some of the world’s most pressing social and environmental challenges. They define the agenda agreed by all 193 Member States of the United Nations (UN) for inclusive economic growth by 2030 and reflect inputs from civil society, businesses, non-profit organizations and academia.
The SDGs are variously referred to as the world’s most comprehensive map of need, risk and opportunity. The scale of the challenge to achieve the goals by 2030 requires both reallocation of public and private investment flows towards the SDGs and new solutions at scale. The Standards aim to support that shift, helping more private equity funds to move beyond using the SDGs operationally as a reporting lens to align their existing investments and activities with the SDGs, to using the SDGs more strategically to reorient and redirect their investment capital towards investment opportunities that contribute to the SDGs, including reducing negative impacts.
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