United Nations: Creating a New Hub for Sustainable Investment Deals

United Nations: Creating a New Hub for Sustainable Investment Deals
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United Nations: Creating a New Hub for Sustainable Investment Deals

The UN recently wrapped up its annual High-Level Political Forum on Sustainable Development, which brings together the 193 Member States to explore how they plan to reach the UN’s Sustainable Development Goals (SDGs). A little more than two years since their adoption, the SDGs have taken real root globally, and, importantly, are being embraced by the private sector – a trend likely to foster compelling opportunities for investors focused on environmental, social and governance (ESG) factors.

The 17 SDGs are socio-economic-environmental objectives designed to deliver prosperity to societies and economies – while protecting the planet in the process. The underlying targets and indicators give sustainability-oriented investors something they have long yearned for: a framework to measure and track impact.

This is not a moralizing UN exercise, but a serious agenda that aims to develop sustainable economies for the benefit of all, including the private sector.

Roadmaps to investment opportunities

At the recent UN forum, dozens of governments presented their SDG strategies and updates – called, in usual inscrutable UN speak, “Voluntary National Reviews.”

What’s exciting from an investor and PIMCO perspective is that these national strategies are evolving into roadmaps for investment – that is, countries are beginning to detail how they plan to finance their SDG ambitions and goals, from infrastructure to energy to education to food security. And more and more of these plans include strong references to collaborating with private finance and institutional investors.

There is no question that private-sector investment and finance will be essential as a complement to public finance in reaching the SDGs. The UN estimates that achieving the SDGs by 2030 will cost between $3 trillion and $5 trillion per year – implying an annual financing gap of at least $2.5 trillion when current public and private expenditures are taken into account.

The SDGs may well position the UN as a broker of sorts for sustainable investment deals. At the forum, numerous governments presented projects to international investors – including some who had never set foot in the UN before. Examples included Jamaica and wind farms, Vietnam and hydropower plants, and Bangladesh and water infrastructure.

While perhaps small in scale when considered individually, such projects could potentially be pooled into SDG bonds or collateralized loan obligations with different tranches.

Partnering with investment leaders

Given the palpable excitement for these projects, the UN now plans to regularly convene SDG Investment Fairs to gather the worlds of public and private finance – and, it is hoped, unlock deals that target the double dividend of investment return and positive social impact.

The UN has asked PIMCO to help design these fairs and be actively engaged as an investor during the deal-making discussions. We are excited about this opportunity and will share our key takeaways.

Learn why we believe the bond market is uniquely suited to both benefit from and provide finance for ESG-related efforts.

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Gavin Power is PIMCO’s chief of sustainable development and international affairs. Prior to joining PIMCO in 2018, he was the deputy executive director of the United Nations Global Compact, a platform to advance sustainability and responsible investment.

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