The face of business is changing. Previous practices placed a company’s profit over everything else. Today, businesses are more focused on the triple bottom line: people, the environment, and profit.
Perhaps the greatest reason for this focus shift is the realization that businesses have a great impact on both society and the environment. The extraction of raw materials and production of products has a huge influence on the climate. If companies aren’t acting responsibly, then the world suffers.
As we’re realizing the great power that businesses have, companies are being held accountable for things like climate change and social issues. It’s becoming more common for legislation and regulation to hold businesses financially responsible for their impact on this earth. Businesses must make more sustainable and socially responsible choices if they want to continue to see a profit.
Because of this, those who are looking to invest need to take a hard look at sustainability practices and the social impacts of the businesses that they want to support. Impact investing isn’t just an ethical choice. It’s an important consideration if you want your investments to yield returns in the long run. Part of making an impactful investment is ensuring that the companies you invest in are following the SDGs. But, what exactly does this look like, and why are the SDGs an important investment consideration? Let’s take a look.
Have You Read?
The Sustainable Development Goals are 17 global goals laid out by the United Nations. These goals include things like eradicating poverty and hunger, developing clean energy sources, achieving equality, stopping climate change, and more. They’re interconnected, meaning that one achieved goal will help to achieve other goals on the list. These goals are monitored through 232 indicators and are made up of 169 targets, creating a scientific approach to massive problems.
Although it’s not a requirement to pursue the SDGs, they have become the foundation for policymakers and the private sector when it comes to making environmental and social decisions. Business owners would do well to pay attention to SDGs as they plan for the future of their companies; the SDGs are often used when policymakers decide regulations and other business legislation. Businesses that fail to keep the SDGs in mind may face financial repercussions in the future.
The SDGs and impact investing
Impact investing is simply when an investment is made with impact in mind. Impact investors will invest in projects that are making a positive difference in the world.
Impact investing supports projects that are conscious and ensures that operational practices leave the world better than they left it. It can cover a wide variety of projects and one can be a support to retailers that carefully audits its supply chains to ensure that minimal plastic packaging is used and workers are compensated fairly.
Up until now, impact investing has been a more alternative investment style. Investors favored more traditional investment routes: investing in a company that’s sure to yield profits without considering social and environmental implications. However, because company success now depends on more than just profits, this is changing.
If you want your investment to yield a return, the company’s impact must be a consideration. A good way to determine that is to invest in companies that keep the SDGs in mind. As the foundation for policymakers’ decisions and sustainable business models, the SDGs offer a roadmap for businesses that are anticipating future regulations and modern business practices. This is a good sign that these companies will see continued success, therefore yielding a profit to their investors.
How SDG investments come back to you
SDG investments work like traditional investments. The only difference is that a company’s alignment with the SDGs is a major consideration alongside potential profit. When making an SDG investment, you must look at what companies are doing now and planning to do in the future to help ensure that the SDGs are achieved.
For example, telehealth is a booming industry that often aligns with the SDGs. Providing access to doctors via online platforms gives individuals who may not have access to care the ability to speak with a doctor anywhere in the world. It can also grant easy access to mental healthcare professionals, especially in areas where mental health is still stigmatized. This aligns with the SDG3 goal which covers worldwide health concerns.
Another possible SDG investment may be in backing infrastructure projects such as affordable housing and healthcare facilities. These types of projects align with the SDG10 goal of improving equality, the SDG1 goal of eradicating poverty, and the SDG3 goal of improving worldwide health. Because these cover important SDG goals, they are also more likely to be backed by policymakers and other entities that support the SDGs, improving the chances of financial gain.
But, as with any investment, you want to be sure that you will make a profit. After all, investing isn’t charity. Intelligent SDG investing can return a sizable yield. For example, two African startups that are SDG-aligned, Flutterwave and Paystack, saw massive value growth of up to US$1 billion after closing funding rounds. Furthermore, the green bond market saw a 51% growth in 2019 (to around US$261 billion). Clearly, there’s money to be made in SDG investments.
When making SDG investments, make sure that you’re doing so wisely.
Don’t just consider the financial rewards from such an investment. Really look into the company to ensure that they are truly aligning with the SDGs in a targeted and measurable way.
How TONTOTON aligns with the SDGs
Besides investing in companies that align with the SDGs, you also need to make sure that your company aligns with the SDGs. This will encourage impact investors and investors that care about the SDGs to invest in your company, ensuring future growth. Partnering with TONTOTON can be your first step toward SDG alignment.
TONTOTON is a business. We are not a non-profit or NGO. We are a certified plastic credit system that uses the money we earn from selling plastic credits to employ individuals to remove plastic waste from vulnerable communities in Vietnam and Cambodia. We provide competitive wages to waste pickers, allowing them to better support their families while removing harmful plastic waste from their own villages.
We’ve monetized a type of plastic waste that was previously ignored—what we call orphan plastic—encouraging waste pickers to clean up more than recyclable trash. This leads to cleaner communities, limits the amount of plastic waste that ends up in the ocean, and provides much-needed employment to low-skilled workers. Once the plastic waste is collected, we send it to cement factories for co-processing where it is converted into energy and raw materials. This results in zero waste.
Our plastic credit system aligns with the SDG1 goal of eliminating poverty, the SDG11 goal of creating sustainable communities, the SDG12 goal of responsible consumerism, and the SDG11 goal of keeping our oceans clean.
Partnering with TONTOTON is easy. All you have to do is purchase plastic credits in the amount of plastic waste that your company wants to take responsibility for. While this investment won’t yield a traditional return, it will allow your company to minimize its plastic waste while supporting programs that align with the SDG goals. With legislative ideas like Extended Producer Responsibility (EPR) gaining more traction, companies will be held financially responsible for their environmental and social impact. By taking responsibility for your plastic waste now, you could be saving your company financial repercussions in the future.
SDG investing isn’t just the right thing to do, but a responsible financial decision as well. Take your first steps into impact investing today and make your company promising to SDG investors by partnering with TONTOTON today.