Our innovative Sustainable Development Goals (SDG) dataset offers a quantitative, objective, and factual way for investors to assess SDG alignment across portfolios and individual securities. It provides a solution to the problem of companies’ inconsistent and biased SDG disclosures that are mostly qualitative.
We offer three distinct views that investors can explore, across every listed company globally, including products and services revenue alignment, operational alignment, and combined revenue and operations alignment.
Another key feature of our solution is the incorporation of geo-revenue data. Based on our 2,300+ sector impact classifications, this allows investors to see not just what a company does, but where it does it, enabling a more nuanced understanding of impact.
For example, providing financial services in a developed market where such services are already widely available has a different impact than providing those same services in an emerging market where access to finance may be limited. By considering these regional impacts, our dataset offers a more accurate and context-aware view of SDG alignment.
A global lens
To demonstrate the power and utility of our SDG solution, we analysed four major indices: the S&P 500, STOXX 600, MSCI ACWI, and MSCI Emerging Markets, each being compared to the Morningstar Global Markets benchmark. The results underscore the importance of having different views and the unique insights our data can provide.
When we looked solely at products and services revenue alignment, the S&P 500 emerged as the most aligned to the SDGs, with 15% of its revenues being positively aligned. This was a marked improvement from the STOXX 600’s 2% revenue alignment.
However, the picture changed dramatically when we examined operational alignment. In this view, the S&P 500 was the least aligned index on 10 out of the 17 SDGs, being outperformed by the Emerging Markets index across most SDGs.
For a comprehensive understanding, we turned to our revenue and operations Alignment view. Here’s how the indices fared in terms of total SDG alignment (both positive and negative):
A graph showing the number of SDGs an index was aligned or misaligned with (revenue and operational alignment).
A graph showing revenue and operational (normalised using standard deviations) alignment with the SDGs by index.
Notably, the MSCI Emerging Markets index outperformed all other indices across 7 SDGs, especially those associated with social factors. This can be attributed to companies like PT Bank Central Asia and Sun Pharmaceutical Industries Limited, which are making significant contributions to SDGs, through their operations in developing countries.
PT Bank Central Asia, for instance, is contributing to SDG 1 (No Poverty) through its retail banking services. With 100% of its revenue coming from Indonesia, the bank is playing a crucial role in providing access to financial services in a country where access is not widespread. This aligns with target 1.4 of SDG 1, which emphasizes the need for all men and women to have access to financial services, including banking, transactions, savings, and loans. In countries with a strong presence of financial services, the impact delivered is limited. However, in countries like Indonesia, where financial services are not as prevalent, companies like PT Bank Central Asia are making a significant contribution to achieving SDG 1.
Sun Pharmaceutical Industries Limited is another example of a company making a significant impact in developing countries. With 49% of its revenue linked to SDG 3, the company is supporting research and development of vaccines and medicines for diseases that primarily affect developing countries. This aligns with target 3.b of SDG 3, which calls for access to affordable essential medicines and vaccines for all.
We’re only scratching the surface of what’s possible with our SDG data. Our Smart ESG portfolio optimiser also leverages it to create custom-aligned SDG-specific portfolios, which you can see examples of here.