a powerful force for change - the UN’s sustainable development goals and risk/adjusted returns

Patrick Odier Senior Managing Partner

I’m very pleased to see and hear that the UN’s Sustainable Development Goals (SDGs) are being adopted as a standard by political, economic and societal stakeholders. This is important not just because it enables a commonality of language and understanding, but also because that, in turn, can be a powerful force for change.

Through the SDGs, the key indicators have now been identified and agreed upon, and today’s information age means the metrics for measuring impact are more quantifiable. That transparency plays an important role in making the SDGs so impactful.

As a result, we have arrived at a point where investing in line with the SDGs has become relevant to portfolio risks and returns. The millennial generation will not tolerate the absence of discussion on these objectives. Governments are getting their act together to prioritise international action on this. National public authorities are also putting these objectives at their centre of their preoccupation by, for example, asking companies to be much more transparent around their policies and actions.

Not taking these factors into account will lead to higher risk in portfolios. That risk needs to be well analysed, understood and mitigated. It belongs in our core duty to see how these issues impact the risk/return of a portfolio.

Consequently, investing in line with the SDGs is very much embedded in our fiduciary duty. But we also have to ask ourselves in the most basic terms whether it is acceptable that 750 million people in the world still live in poverty. Can we accept that 100 million young people in Africa are not being educated? Fifty three million of those young people are women, and we know women are an important part of the solution to many of the challenges captured by the SDGs.

It is therefore also important that investors, whether public or private, come together in the spirit of collaboration and innovation to help address some of the biggest challenges facing humanity. We have to share the responsibility of those challenges from a risk and an investment point of view. We at Lombard Odier do not shy away from this responsibility. In fact, we believe it is a central characteristic of who we are as a firm.