Private investors have long sought to align their investments with the Sustainable Development Goals (SDGs), but evaluating corporate impact on the SDGs remains a challenging task. Current methods often lack scientific basis and transparency, making it difficult for investors to determine the effectiveness of their investments. To address this issue, researchers have developed an evidence-based review approach that allows investors to evaluate the impact of economic sectors on individual SDGs.
The authors conducted an initial review of 81 economic sectors and found that most sectors negatively impacted environmental SDGs. Primary sector activities had the most significant negative impact on a larger number of SDGs compared to other sectors. By studying the agricultural sector as a case study, the authors demonstrated how ripple effects from SDG interactions could affect multiple goals simultaneously.
Their research highlights three critical considerations for sustainable investment strategies: firstly, investors must account for ‘impact shadows,’ which refer to indirect impacts that may not be immediately apparent. Secondly, they need to understand the spillover effects of actions across different SDGs. Finally, a holistic approach is necessary when formulating investment strategies to ensure that all aspects of sustainable development are considered.
In conclusion, private investors can use an evidence-based approach to evaluate economic sectors’ impact on individual SDGs. By considering ‘impact shadows,’ spillover effects, and adopting a holistic approach, they can make informed decisions about their investments and contribute positively towards sustainable development.