The global sustainable development goals are headed to Wall Street – and ready to take your money. The Rockefeller Foundation’s non-profit investment arm announced during the United Nations’ annual summit of world leaders that it’s starting a consumer investment fund aimed at companies that are committing capital to poor countries and advancing sustainable development.
The exchange-traded fund or ETF holds a basket of equity shares that are traded collectively like shares of an individual company, in this case on the New York Stock Exchange. The Sustainable Development Goals Global ETF (symbol: SDGA) is managed by Rockefeller’s Impact Shares investment manager. Green energy, health care and ethical business practices – linked to SDG 16’s anti-corruption element – all figure in the portfolio.
The fund seeks investment results that correspond to the performance of the Morningstar Societal Development Index, created in collaboration with the UN Capital Development Fund, Impact Shares, Morningstar and Sustainalytics. Companies included in the index are screened against environmental, social and corporate governance indicators and alignment with the SDGs that target global change by 2030.
“We hope the ETF will encourage more companies to report on environmental, social and governance issues, as well as how their businesses are aligning with the UN SDGs,” UN Capital Development Fund Executive Secretary Judith Karl said in a statement. The UN agency works in 47 countries to bring the unbanked into the financial system through mobile money, micro-lending, simple financial apps and other approaches.
Karl said pension funds and socially conscious investors – those who steer clear of polluters, arms manufacturers, tobacco-products makers and other companies perceived as harmful to society – had asked how they could channel capital to the SDGs. The ETF answers that demand. Impact Shares will donate the net management fee for the fund to UNCDF for use in developing countries.
The five largest investments currently in the ETF, which has about $2 million in assets in these early days, are Microsoft Corp., Nestle SA, Bank of America Corp., Pfizer Inc. and Cisco Systems Inc., according to ETFdb.com. Holdings also include media and entertainment conglomerate Walt Disney Co., sports-apparel maker Nike Inc. and dozens of other companies.
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The Impact Shares ETF has competition coming from iShares MSCI Global Impact ETF, which will change its trading symbol on October 23 to SDG from MPCT on the NASDAQ exchange. Begun in April 2016, the iShares fund held almost $38 million as of September 28. Its expense ratio is 0.49 percent of assets versus 0.76 percent for the UN-linked ETF, according to ETFdb. Since its launch the fund reports that it has earned investors a total return of 9.66 percent.
The iShares fund, owned by New York-based BlackRock, has global equity exposure in “positive impact companies” that generate a majority of revenue from products or services “that address at least one of the world’s major social and environmental challenges” as defined by the SDGs, according to the fund’s web site. BlackRock is the world’s largest money manager.
The top five investments among 104 companies held by the iShares fund are Belgium’s Umicore SA, a refiner and recycler of precious metals; East Japan Railway; Denmark-based wind-turbine maker Vestas Wind Systems, the U.K.’s Johnson Matthey Plc, a chemicals maker that’s producing sustainable fuels from biowaste; and American soap and diapers (Pampers) giant Procter & Gamble Co.
Impact Shares says it hopes eventually to include companies from the developing markets it’s trying to lift through support of the SDGs. The non-profit says it seeks “to build a capital markets bridge between leading non-profits, investors and corporate America to direct capital and social engagement on societal priorities.”