The world’s governments will gather from 9 July for the High-Level Political Forum, an annual United Nations gathering to review progress towards the Sustainable Development Goals. They will certainly, as they have in the past, flag the high costs of achieving the SDGs, re-iterate their aim to “leave no one behind”, and call on the private sector to step up its contribution.

Leaders and experts from business and finance are now a growing fixture at these events, presenting their new ideas, solutions, products and business models. Not a day passes without news of new sustainable finance products – green, sustainable, social or blue bonds, impact investing products, blended finance solutions, and themed or “Paris-aligned” portfolios and SDG engagement strategies. Policymakers and regulators are equally engaged, as evidenced by EU Sustainable Finance Action Plan and its newly released taxonomy of sustainable economic activities, the push and growing acceptance for climate risk disclosure requirements (TCFD), or the multiplication of sustainable finance roadmaps in countries from China to Canada.

Still, HLPF participants are bound to hear, as they did last year, that we are not on track to achieve the SDGs. Why the disconnect?

Because the private sector has yet to create business models and financing approaches that can get to the required scale.

Yes, the SDGs are a massively complex set of issues. Yes, common sense and common practice dictate to break down complexity into manageable parts, which is often how banks and investors approach the SDGs, hammering away at them one or two Goals or sectors at a time, and in isolation. But the SDGs were designed, signed and declared as “interconnected and indivisible” and need addressing in a more systematic, holistic way.

In the policy world, there is the documented risk that taking the SDGs piecemeal turns into addressing one at the expense of the others. In a way, that’s the story behind the Gilets Jaunes’ protests in France, where a government’s attempt to implement a carbon tax triggered widespread demands for more jobs, better livelihoods and better territorial wealth distribution. In fact, many governments grapple with this: they push for reforms in the face of an acute convergence of economic, social and environmental challenges, from biodiversity loss to job creation, from climate change to growing income inequalities, from gender to tech. When they fail to reconcile these objectives, it sows division, which leads (at best) to the status quo.

Just as policymakers are learning from this, so must business and finance, starting with an acknowledgement that all human and business activity has a mix of positive and negative environmental, social and economic impacts. This broader, holistic, 360 degree view is the only way to properly connect impact with the real economy, because it allows businesses and finance to understand what social and environmental benefits businesses or projects can deliver, how to mitigate their negative impacts, and importantly to understand their business drivers. The biggest challenge in addressing the SDGs today is that companies need to bring positive impacts much closer to the value creation process – and stop looking at them as mere externalities. For those who understand the SDG opportunity, this will lead to a disruption of business models, where impacts drive value creation. The implications should not be underestimated: it means not only that SDG become dramatically more bankable, but also that the actual cost of achieving the SDGs will be decreased, as new efficiencies are created.

Some financial institutions have focused on a limited number of dedicated, investable SDG sectors, such as clean technologies or affordable housing. These efforts are important but, while some industries such as clean energy can be clearly aligned with a specific environmental outcome (less carbon in the atmosphere), many desirable social and environmental impacts – from gender equality to poverty alleviation – are more diffuse in the economy, making a holistic approach crucial.

Some may consider that the financial sector is already doing plenty to measure and manage impact. It does, but there is only too little that is holistic and can touch across all sectors of the economy.  When the financial sector adopts a holistic approach, it can also analyse and manage impacts of non-ring- fenced run-of-the-mill corporate equity or debt financing tools, distinct from typical green or impact finance. In doing so, it can open vast tracts of financial flows to the SDGs as new pathways to achieve impact through mainstream finance are revealed.

The Positive Impact Initiative has advocated for holistic impact analysis from its beginnings, starting with its Principles for Positive Impact Finance. It has developed an Impact Radar to help business and finance identify areas of impact, as well as model frameworks for the holistic analysis of impact in settings such as corporate finance (including public equities and fixed income from an investor perspective).

It currently operates two working groups to take that work into practice. One where banks are experimenting with assessing their own books, another to test the model framework for corporate finance through real case analyses and experience sharing.

What holistic is not: a “flat world” view, where all things are equal in urgency and humans devoid of agency, of opportunities to prioritize economically, environmentally, socially. What it is: an essential need to avoid giving from one hand and taking back from the other. Holistic impact analysis gives us the best chance yet to take a business-driven approach to sustainability. More than the avoidance and mitigation of risks, the reward entails vast new market opportunities, renewed trust between society, government and the private sector, and better environmental and social outcomes for all.

The Sustainable Development Goals have set an ambitious timeline to accelerate shared prosperity while addressing egregious challenges to society and the environment, at a moment when profound transformations are taking place. For mainstream finance, now is not the time to take a piecemeal approach to the SDGs. Only a holistic approach can take SDG finance to scale.

Careen Abb, Programme Leader, Positive Impact Finance, UNEP Finance Initiative

Learn about PI at

Reproduced by kind permission of  Environmental Finance