SDG Finance Frameworks can be a very effective tool for companies to use in communicating to investors a coherent and comprehensive approach to SDG investments and finance, one that incorporates all aspects of the CFO Principles.
The goal of an SDG Finance Framework is to provide investors with a framework that captures the main elements of a company’s SDG impact thesis, strategy, investment, and measurement. It can become a platform for investor communication on SDG, with a dynamic link to an integrated report, including more detailed information and periodic updates on performance.
Recommended Content SDG Finance Frameworks
SDG Finance Frameworks should describe the SDG impact thesis and how it is measured, introducing KPIs and targets that the company has chosen to represent its material impacts (both positive and negative) on the SDG. Companies can convey the uniqueness and the competitiveness of their impact thesis, based on their industry and country of operations.
Companies should also explain how the impact thesis is translated into a strategy and integrated into their overall strategy. They should describe the investments that a company is making—and planning to make—to implement the SDG strategy, along with the impact of those investments on the long-term value of the company, including economic and financial results. Companies should also describe how their corporate governance processes are used to monitor the impact of its strategy and investments, including management systems, governance, oversight and controls, and reporting processes.
Lastly, SDG Finance Frameworks should describe how a companyis raising the capital needed for its SDG strategy and investments. This should include a description of outstanding debt the company has raised specificallyto implement its SDG strategy, whether use of proceeds or SDG-linked, along with plans to raise sustainable finance in the future.
How To Use SDG Finance Frameworks?
SDG Finance Frameworks can be used as a part of a company’s investor relations toolkit, both for communications with existing investors and for the issuance of new sustainable-finance products, including use of proceedsor SDG-linked bonds, loans, and credit facilities.
SDG Finance Frameworks can complement integrated reporting, providing a deeper, more focused look at the company’s strategy and investments for the SDGs and financing plans. At the same time, integrated reports can provide investors with detailed, timely information on critical elements of the CFO Principles, including how the strategic integration of the SDGs is linked to long-term value creation and how corporate governance is leveraged to monitor SDG investments.
