We are also firmly convinced that various companies offer very promising investment opportunities precisely because of the increasing pressure to find solutions.
With the help of our SDG rating methodology, we identify which companies and organizations contribute to which SDGs, to what extent and whether they promote or reduce the achievement of the goals. In particular, we examine the economic activities through which companies make this contribution. We call these economic activities #radiTags. We deliberately tag them with the hashtag sign because we are convinced that they have the potential to go viral in social media and financial markets as investment trends. We will share, describe and discuss them with our community in the coming weeks.
What exactly are #radiTags?
Our #radiTags are defined by two components:
- Firstly, they describe an economic activity which contributes significantly to the SDGs. We often speak about “solutions” in this context. With few exceptions, we primarily refer to the provision of products and services. These often reflect a company’s main impact on society and the environment more accurately than business practices alone. Although we aim to capture and assess all relevant economic activities of companies (including those that negatively impact the SDGs), our #radiTags only describe activities that positively contribute to solving at least one SDG. Thus, the economic activity of the #radiTags must have a positive impact on society and the environment.
- Secondly, #radiTags also denote economic trends worth investing. We expect these trends to intensify in the future: Global challenges will increase, alongside the pressure from society to make a difference. This will benefit companies that provide solutions and are prepared to respond to political measures and consumer reactions.
Why do SDG-enabling solutions generate investment opportunities?
It is our firm believe that the UN Sustainable Development Goals (SDGs) are not only representing sustainability goals but also generate great investment opportunities. (To find out more on this topic, read the two articles from our Chief Sustainable Investment Officer here and here). The logic is simple and obvious: With the SDGs, the international community has identified the most urgent global problems and simultaneously committed itself to solving them collectively. Major global challenges lead to pressure from society. Governments and business have to address them and provide solutions. Policymakers respond with incentives and regulations, while business responds with product innovation and adjustments that contribute to the achievement of the SDGs. This encourages competition amongst companies, which further drives them to deliver even better solutions. Conversely, consumers, as part of society, will increase demand for solution products & services. Companies that contribute to solving global problems such as climate change and co. will have a competitive advantage and as a result, are exciting investment opportunities.