Six winners took the award for best global sustainable fund and best emerging market sustainable fund in UNCTAD's first ever Sustainable Fund Awards 2021 at the 7th UNCTAD World Investment Forum, held virtually this week.
With a growing need to mobilize the vast sums of capital needed to meet the Sustainable Development Goals (SDGs) by 2030, sustainable finance and the global capital market can play a role.
UNCTAD estimates that the value of sustainability-themed investment products amounted to $3.2 trillion in 2020, up more than 80% from 2019, showing that the capital market is increasingly aligning itself with sustainable development outcomes, including the SDGs.
However, most sustainability-themed investment products are based and invested in developed economies. "To maximize the impact on sustainable development, more funds should be invested in developing economies," said Rebeca Grynspan, Secretary-General of UNCTAD.
Looking ahead, the market also needs to tackle concerns of greenwashing and substantiate its contribution to sustainable development on the ground.
"In the coming years, the sustainable investment market needs to transform from a niche to a mass market that fully integrates sustainability in business models and culture," Ms. Grynspan said.
This is the reason UNCTAD established the new award. "We launched the UNCTAD Sustainable Fund Awards because it is important to recognize a commitment to SDG funding and the achievements of high quality, high impact sustainable funds. We want to encourage a 'race to the top' for sustainable finance products," said UNCTAD's director of investment and enterprise, James Zhan.
The six winners were drawn from over 780 sustainable funds that met multidimensional sustainability criteria while outperforming their respective financial benchmarks. The final selection was voted on by an international committee comprising sustainable finance experts from international organizations, industry associations and academia, and chaired by UNCTAD.
Four joint winners in the category Global Sustainable Fund (Aegon Global Sustainable Equity Fund, Baillie Gifford Positive Change Equities Fund, New Alternatives Fund A, and Swisscanto (LU) Equity Fund Sustainable Global Climate) all had exceptionally high sustainability and ESG ratings, a significant exposure to SDG sectors and low or zero exposure to fossil fuels and controversial sectors.
Two joint winners in the category Emerging Market Sustainable Fund (Matthews Asia ESG Fund, and Stewart Investors Global Emerging Markets Sustainability Fund) both had high sustainability and ESG ratings, while maintaining significant investment in emerging markets.
Despite all winners being domiciled in developed markets, four funds from China and Brazil did make it onto this year's short list for the emerging market category. One of the Awards' goals is the promotion of investment in SDG-related sectors and in developing countries.
A new finance observatory
To support a credible, transparent and growing sustainable finance market, UNCTAD also launched the Global Sustainable Finance Observatory at the forum, with a vision to building a future global financial ecosystem in which sustainable development, as defined by the SDGs, is fully embedded into the business model and investment culture.
"Working in tandem with the standard-setting processes of the financial industry and regulatory bodies, the observatory will address the challenges of fragmentation in standards, proliferation in benchmarking, complexity in disclosure, and sustainability washing concerns," Mr. Zhan said.
The 7th World Investment Forum features a track of events dedicated to sustainable finance, which brings together the world's largest institutional investors, asset managers and other international sustainable investment community stakeholders to discuss ways and means to mobilize more investment for sustainable development in the post-pandemic era, particularly in developing countries.
