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SDGs 17 development goals environment

Chart of the Week-June 13, 2022

Funds focused on alignment with UN Sustainable Development Goals (SDGs) Fund Name/Symbol AUM (M$) Expense Ratio (%) Description Impact Shares Sustainable Development Goals Global Equity ETF (SDGA) 5.3 0.75 An index tracking fund designed to measure the performance of large and mid-capitalization companies globally that (i) display a commitment to the UN’s Sustainable Development Goals,…

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The Bottom Line:  Funds focused on investments based on their alignment with the UN’s SDGs are limited and they don’t address SDG contributions over time.

Funds focused on alignment with UN Sustainable Development Goals (SDGs)

Fund Name/Symbol

AUM (M$)

Expense Ratio (%)

Description

Impact Shares Sustainable Development Goals Global Equity ETF (SDGA)

5.3

0.75

An index tracking fund designed to measure the performance of large and mid-capitalization companies globally that (i) display a commitment to the UN’s Sustainable Development Goals, (ii) adhere to the principles of the UN Global Compact, (iii) display a commitment to reducing poverty and supporting economic development globally and (iv) have exposure to countries with low levels of socioeconomic development.

iShares MSCI Global Sustainable Development Goals ETF (SDG)*

442.0

0.49

Index tracking fund that invests in companies that derive a majority of their revenue from products and services that address at least one of the world’s major social and environmental challenges as identified by the United Nations Sustainable Development Goals.

Federated Hermes SDG Engagement High Yield Credit Fund

-IS (FHHIX)

-R  (FHHRX)

46.6

 

 

0.62

0.57

UN SDG goals and targets are used as a framework for identifying, articulating and measuring positive impact opportunities within the companies that the fund chooses for investments.  The fun seeks to invest in companies that are aligned with at least one of the SDG goals and also exhibit willingness to enact the changes suggested by the adviser.  

Federated Hermes SDG Engagement Equity Fund 

-A (FHEQX)

-IS (FHESK)

-R6 (FHERX)

65.6

 

 

1.19

0.94

0.89

UN SDG goals and targets are used as a framework for identifying, articulating and measuring positive impact opportunities within the companies that the fund chooses for investments.  These include small- and mid-capitalization companies in both the United States and foreign markets.  In addition to quantitative financial indicators and metrics, qualitative criteria will include assessment of company management competence, integrity, vision, potential and willingness to enact the changes suggested by the adviser during company engagements.

Notes of Explanation:  *On December 30, 2021, the name of the Fund changed from the iShares MSCI Global Impact ETF to the iShares MSCI Global Sustainable Development Goals ETF.  Sources:  Descriptions based on fund prospectuses.  AUM and expense ratios:  Morningstar Direct.

Observations:

    • The UN Sustainable Development Goals (SDGs) are a collection of 17 global goals set by the UN Development Program that calls for the integration of economic development, social equity, and environmental protection. Adopted in 2015, the SDGs are intended to stimulate action over a period of 15 years to 2030 in areas of critical importance for humanity and the planet, including: poverty eradication, food security, health, education, gender equality, access to water, sanitation, clean energy, decent jobs, key infrastructure, strong institutions, inequality reduction, sustainable urbanization, responsible production and consumption patterns, climate change mitigation and adaptation, and ecosystem conservation.
    • According to the just released Sustainable Development Report 2022 published on June 2, 2022, the world’s progress on the UN’s Sustainable Development Goals (SDGs) has declined slightly for the second year in a row.  The average SDG Index score slightly declined in 2021, partly due to slow or nonexistent recovery in poor and vulnerable countries. 
    • Sustainable investors seeking to invest in securities via funds whose investments, in addition to varying fundamental investment factors, are chosen based on their alignment with the SDGs, have limited options.  These consist of just four mutual funds and ETFs, including two actively managed funds, one equity and the other a high yield fixed income fund as well as two, passively managed, equity-oriented funds.  These funds also vary as to their track records, fund sizes and expense ratios. 
    • Even at that, the funds focus on alignment of securities with the SDGs rather than the achievement of specific outcomes or contributions over time, and reporting on SDG contributions is not provided by any of the four funds.
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