SDG BONDS: Leveraging Capital Markets for the SDGs

The UN Global Compact Action Platform on Financial Innovation for the SDGs

At the heart of the 2030 Agenda are the 17 Sustainable Development Goals (SDGs) and their 169 underlying targets. While the public sector and public finance will be core to the implementation of the SDGs, it is widely acknowledged in the international community that the private sector and capital markets must also play a key role.

According to some estimates, implementation of the SDGs will open market opportunities valued in trillions of U.S. dollars.  The Business Commission for Sustainable Development identified some 60 sustainable and inclusive market “hotspots” in four key economic sectors. At the same time, investor interest in the SDGs is growing. Many of the world’s largest institutional investors see the goals as a key framework to fill a growing investor demand for impact and to support sustainable investment strategies.The Principles for Responsible Investment include that “We recognise that applying these Principles may better align investors with broader objectives of society.” Never before have these “broader objectives of society” been more clearly defined than in the SDGs. The confluence of these trends suggests that a market for mainstream SDG investments could be created, with enough scale, liquidity and diversification, to attract large institutional investors and finance a broad set of privateand public-sector activities in support of the SDGs. This report seeks to introduce a flexible framework to support the many ways businesses and Governments can contribute to the SDGs, while creating a large and diversified market for investors. In addition, we seek a paradigm shift where companies and other issuers can compete for capital based not only on their investment thesis, but also on their impact thesis and how they will use funds to contribute to the SDGs.
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