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Thought Leadership

Affirmative Impact October 2018

Posted by First Affirmative | Oct 23, 2018 11:34:16 AM

The UN Sustainable Development Goals: Targets for Positive Impact

By James Griffitts
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On September 25th, 2015, all 193 member states of the United Nations adopted a set of 17 goals aiming to “end poverty, protect the planet and ensure prosperity for all as part of a new sustainable development agenda,” to be met by 2030. Building on the successes and aspirations of the Millennium Development Goals (MDGs) laid down in 2000, the UN Sustainable Development Goals (SDGs) aim to surpass them through a more comprehensive set of goals and a concerted effort to include all stakeholders in the solutions: The MDGs were aimed primarily at governments, whereas the SDGs are a call to action for international institutions, governments, individuals, and public and private organizations at every level.

Sustainable Development Goals

Many companies have already begun to integrate the SDGs into their business practices, with over 60% of global public companies producing sustainability reports specifically denoting their efforts to advance them. SRI investors can, therefore, review companies via the lens of the SDGs. This will enhance the ability of portfolio managers constructing strategies of public equities and bonds to invest for intended impact given the explicit goals established by the SDGs. Indeed, funds which incorporate the SDGs into the investment process have already been established, and more are likely to follow.

Because of their importance, the SDGs were a major fixture in The SRI Conference program in 2017, and the 2018 agenda includes a panel called The Opportunities and Challenges of Incorporating the SDGs into Portfolios. As the UN estimates achieving the SDGs will require capital investment in excess of $4 Trillion annually, leveraging the $70 Trillion of AUM invested globally will be crucial. In September, the UN launched Youth 2030: Working With and For Young People, a strategy aimed at mobilizing young people’s ideas and capacity to help achieve the SDGs, especially for young people.

As countries around the world implement policy around the SDGs and individual consumers become increasingly aware of bad actors, businesses working to advance the SDGs should be well positioned to succeed. Per Walden Asset Management, “Astute companies will recognize the SDGs as guidance on the likely, future regulatory environment. If a company offers a product that advances the goals, or if it manages its operations and supply chain in a way that is in-line with the SDGs, then—all else equal—it will likely be a more sustainable business long term relative to companies with operations and products that are antithetical to the goals.” Because all 193 members of the UN, nearly the entire planet, have committed to the SDGs, companies unprepared to integrate them into their business model risk isolation and may find themselves playing catch up. Indeed, the SDGs highlight the need to address issues long recognized by the SRI community as detrimental to long-term shareholder value such as impact on climate change, exacerbation of wealth inequality, and lack of diversity.

Colorado Energy Plan: A Blueprint for the Renewable Energy Future

Green EnergyFirst Affirmative’s home state of Colorado is on the fast track to renewable energy dominance in its energy mix, after the Colorado Public Utilities Commission approved Xcel’s Colorado Energy Plan during its first day of deliberation. This lightning speed acceptance of this aggressive plan to reduce fossil fuel sources of energy is a welcome reflection of the fact that renewables are becoming not just the preferred choice to combat climate change, but also the least costly choice — even when taking into account the expense of retiring coal plants before the end of their lifespan.

What is the plan?

  • $2.5 billion statewide investment to procure 1,800 MW of wind and solar
  • retirement of two coal plants 10 years ahead of schedule
  • development of 275 MW of energy storage resources

What are the benefits?

  • achieve 55% renewable energy by 2026, up from 29% renewable energy in 2016
  • reduce greenhouse gases by 60% from 2005 levels
  • increase energy independence, as all projects will be located in Colorado
  • improve air quality as fossil fuel sources of energy continue to decrease
  • save customers an estimated $215 million by 2054, a reflection of the historically low cost of renewables

“We are making an enormous transition and renewables will play a big role in that, but to me, it’s not just renewables. The endgame is carbon reduction in the most affordable, pragmatic way possible.”

-Ben Fowke, Xcel Energy CEO, at the Edison Electric Industry Group’s Annual Convention in San Diego, California on June 6th.

Can CSR Change Saudi Arabia?

James Griffitts

Saudi Arabia has long been known for its poor human rights record. Women’s rights are nearly nonexistent in the country, with the ban on women driving ending only this year. Restrictive guardianship laws prohibit Saudi women from being in any public space without a male relative to chaperone. The Saudi religious police brutally enforce laws requiring veils and prohibiting adultery. Indeed, Women in the Kingdom cannot make any major decisions without permission from their male guardian. Nor is Saudi repression limited to women. Religious minorities face constant persecution, while homosexuality remains criminalized. As the recent disappearence and probable assassination of Jamal Khashoggi shows, the Kingdom meets even moderate political dissent with torture and execution.

KhashoggiThe apparent killing of Khashoggi, a Saudi journalist who supported democratic reforms in the country, puts a dark cloud over the Kingdom, especially the Crown Prince, Mohammad bin Salman, who has sold himself as a modernizing reformer since his ascension to de facto rule of the country. Bin Salman has been the architect of significant reforms, including restricting the powers of the religious police, opening up the country to some foreign media and art, and notable expansions in women’s rights such as the right to drive, vote in local elections, and own a business without male permission. His stated goal for the Kingdom: “returning to what we were before—a country of moderate Islam that is open to all religions and to the world.” Bin Salman’s agenda also includes a commitment to renewable energy and sustainable development, as articulated in his Vision 2030 plan to modernize the Saudi economy.

Women driving

Unfortunately, behind this agenda is a drive for total consolidation of power. Bin Salman has ruthlessly purged domestic political enemies and clamped down on any form of dissent. Since his ascension, hundreds of his political enemies have been detained in what is publicly called an anti-corruption campaign. The Kingdom has also stepped up arrests of human rights activists within its borders. Even as women were granted the right to drive, several high-profile women’s rights activists were arrested. Internationally, bin Salman has reacted harshly to even tempered criticism, most notably his response to Canadian Prime Minister Justin Trudeau.

Bin Salman, who is also the defense minister, was the mastermind of the ongoing Saudi intervention in Yemen against the Iranian-backed Houthi forces there. The Saudi campaign in Yemen has specifically targeted Yemen’s vital infrastructure and pushed the already fragile humanitarian situation in Yemen into catastrophe. The UN has reported that war crimes are widespread in the conflict in Yemen. While bin Salman seems genuinely interested in economic and cultural reform, he has shown no tolerance for dissent and no qualms about precipitating a humanitarian crisis in neighboring Yemen.

Building rubbleSaudi human rights abuses are well known, but the Kingdom has long held international criticism in check via the liberal application of its oil wealth. The US relies on Saudi Arabia as a key middle eastern ally and sells the Kingdom billions of dollars’ worth of weapons every year. The EU is dependent on Saudi oil, and western multinationals are offered many lucrative deals there. This status quo is highly profitable and has induced these organizations to turn a blind eye to the darker actions undertaken by the Saudi government in the past, but change may be in the air.

Following the apparent murder of Jamal Khashoggi, allegedly at bin Salman’s direct order, the regime has faced widespread condemnation. The upcoming Future Investment Initiative, a major business conference organized by bin Salman and termed the “Davos of the desert” has seen a flurry of cancellations as corporate partners have sought to distance themselves from Saudi Arabia. The list of cancellations so far includes Blackrock, Blackstone, Bloomberg, CNN, the Economist, the Financial Times, Ford, Google, HSBC, JP Morgan Chase, the LA Times, Mastercard, the New York Times, Uber, Viacom, the World Bank, and more. Despite equivocation from President Trump on Khashoggi’s killing, Treasury Secretary Steve Mnuchin has also cancelled his attendance, in a major blow to bin Salman, given his close personal relationships within the Trump Administration.

While the long-term impact of these boycotts has yet to be seen, foreign companies are vital to making bin Salman’s Vision 2030 plan a reality, meaning companies have unprecedented leverage over the Kingdom. Now is the time for corporations and governments to push for real liberalization in Saudi Arabia, and to refuse to do business with the Kingdom until it makes real progress away from autocracy and state sponsored murder, and towards a more tolerant and democratic society.

Democracy Autocracy

Affirmative Impact is a publication of First Affirmative Financial Network, LLC (Registered Investment Advisor, SEC File #801-56587). The opinions and concepts presented are based on data believed to be reliable; however, no assurance can be made as to their accuracy. Mention of a specific company or security is not a recommendation to buy or sell that security. Past performance is never a guarantee of future results. For information regarding the suitability of any investment for your portfolio, please contact your financial advisor.

The views expressed herein are those of First Affirmative and may not be consistent with the views of individual investment advisors or Broker-Dealers or RIA firms doing business with First Affirmative. Network Advisors may offer securities through various Broker-Dealers and Registered Investment Advisory firms. These affiliations, and all fees charged to clients, are clearly disclosed. First Affirmative’s ADV Disclosure Brochure is available any time. Please write or call for a copy, or visit firstaffirmative.com/about-us.

Topics: Affirmative Impact

Written by First Affirmative