Stockholm (NordSIP) – As we approach the fifth anniversary of the UN Sustainable Development Goals (SDGs), the finance industry continues to coalesce around the need to pursue a sustainability agenda to fulfil the agenda of 2015.
On this occasion, we reached out to Philip Ripman (Pictured), fund manager of Storebrand/SPP Global Solutions Fund, to discuss the evolution of the goals, our progress towards fulfilling them and the impact of COVID-19 in their pursuit.
Five Years Later There’s Still a Long Way to Go
Ripman’s perspective on the SDGs is interesting because of his hands-on experience. The portfolio manager oversaw the change in focus in 2018 when the Storebrand/SPP Global Top 100 fund he had managed for three years became the UN SDGs-linked Global Solutions Fund.
“The goals have been helpful in terms of being the best business plan we have for a sustainable future, and one that countries have committed to,” Ripman says. “The SDGs continue to inform where we need to see increased capital flows in order to solve the challenges ahead,” he adds. “As the goals have been adopted, the information flow and data has become better and we think this will continue. This enables us to make better investment decisions related to the SDGs.”
“However, I think we need to be clear that we have a long way to go on many of the goals,” he warns with reference to the vast amount of capital needed to fulfil the promises of 2015. “We need every different type of capital available, and there is no time to lose. I would however assume that we are still talking trillions, and given the slow rate of progress in some areas it could even be greater than previously stated.”
“Climate Climate change is occurring faster than one would have hoped,” Ripman adds, emphasising the urgency of the matter. “We know that the longer we wait in addressing issues such as climate change, the more costly and drastic the measures need to become if we are to succeed.”
SDG and ESG Integration in Portfolio Selection
“For the Global Solutions Fund, we analyse and identify companies across 4 main themes, with corresponding sub-themes – Climate, Sustainable Cities, Responsible Consumption and Empowerment,” he says.
“We are looking for companies that contribute to the SDGs through their products and services. We employ a combination of top down and bottom up analysis – resulting in smaller universe of companies which we follow closely.” However, the SDGs are not the only tool for portfolio selection. “We also maintain the principles of the EU Sustainable Finance taxonomy – in terms of selecting companies that contribute substantially, do no harm and adhere to expectations concerning human rights.”
“Generally speaking we have a combination of smaller, more pureplay companies and larger more diversified companies that have an advantage in scale,” Ripman clarifies, discussing the role of ESG integration in the process. “This is a feature we seek in order to diversify across the value chain of solutions which we have identified. In this way, ESG informs our company selection, although in a somewhat untraditional manner as I believe ESG is still far too process oriented, rather than product and service focused. Not that process is not important.
Bright Spots COVID-19
Sadly, the anniversary cannot avoid being impacted by the effect of the Coronavirus. “COVID-19 has set some areas back many years,” Ripman explains. “We expect to see a rise in global poverty for the first time since 1998, half the global workforce may be significantly negatively affected due to COVID-19, and women and children are bearing the brunt of the pandemics affect.”
“All of this is concerning and will hopefully lead to refocused efforts in achieving the SDGs,” he adds. “There are however some bright spots, such as increased focus on digital services – ranging from simple connectivity focus to people lacking access today, to new and emerging companies within telehealth and digital education.
“I am excited about this space,” Ripman says regarding developments in these two emerging industries. “I think our reliance on digital services will only continue to increase. I am also excited for this space, especially on the health and education side. Our ability to reach people, and to do so efficiently and perhaps with a greater level of customization is incredibly exciting. I think working remotely will become more normal, although with some growing pains and it will differ from industry to industry. That might have significant knock on effects for transportation and infrastructure. “
“There is always some reversion to the mean, but I think many of these aspects are here to stay,” Ripman concludes
Image © SPP/Storebrand