The United Nation’s Sustainable Development Goals were created to align member nations towards inclusive advancement while also protecting and preserving the natural environment. They were authored as a part of the United Nation’s 2030 Agenda for Sustainable Development and together make up a set of 169 targets under 17 overarching goals.
Beyond motivating and aligning national policy, the SDGs have provided a framework for investors that are interested in putting capital to work to support sustainable development. In the Global Impact Investing Network’s most recent Annual Impact Investor Survey 2020, the GIIN found that more than 70% of impact investors they surveyed now track their performance against the Sustainable Development Goals.
To that end, SJF first pursued a mapping project to understand how portfolio companies from SJF’s third and fourth funds, together representing over $215 million of impact-focused market-rate capital, fit within the UN’s SDG framework in 2019 and has since updated the exercise to reflect additional investments made from SJF Ventures IV.
SJF followed guidance from Mercy Corps to map the 35 portfolio companies that currently make up SJF Ventures III (2012, $90.5 million) and SJF Ventures IV (2016, $125 million). To begin, the SJF team identified 66 of the total 169 targets that could be relevant to venture capital investing models. Portfolio companies were mapped to as many targets as their business activities and impacts directly addressed, with some companies charting to seven separate targets. Concerning the specific methodology implemented, a company was credited as mapping to a given goal by addressing one or more targets under the broader SDG. It is also important to note that this exercise did not account for the depth of a company’s impact; for instance, the fact that a company mapped to five goals did not necessarily indicate that it had more impact than a company that addressed only two goals.
The SJF team discovered that the third and fourth fund portfolios mapped to 15 of the 17 Sustainable Development Goals, with companies specifically addressing 30 separate targets.
Figure 1: SJF Ventures III and IV map to 15 of the 17 Sustainable Development Goals
Waycare, an SJF Ventures IV portfolio company, is an AI-based connected mobility platform for transportation agencies that harnesses data from sources such as GPS, navigation apps, connected vehicles, and infrastructure to provide actionable insights which improve traffic and safety management operations. Waycare serves as an interesting mapping example, as the company covers six targets across four goals.
Mapping SJF Ventures III and IV portfolio companies to the Sustainable Development Goals confirmed the firm’s commitment to impact and reiterated the breadth of SJF’s portfolio. It also broadened the team’s understanding of impact and solidified a common vocabulary.
That being said, the small reach of some portfolio companies, particularly in the healthcare sector, was a surprise to the team. One of SJF’s healthcare focus areas is chronic disease treatment and management for underserved populations in the United States, a topic which is only covered by two targets, Target 3.4 addressing non-communicable diseases and Target 3.8 addressing universal quality healthcare. SJF portfolio companies in this vertical have deep impact that the SJF team did not feel was adequately credited by the SDG framework. This underscored the fact that the SDGs are a measure of focus and the number of targets or goals a company maps to should not be construed as a measure of impact. Furthermore, this gap between perception and mapping highlighted that the SDGs may be geared more towards developing nations, with most of the described health targets addressing health concerns relevant to developing nations. This is not to say the framework is not useful for impact investors focused on the developed world, just that there are fewer relevant targets and goals for funds like SJF operating in these markets.
Going forward, SJF will continue to track investments against the Sustainable Development Goals, as the SDGs have provided a common vocabulary to discuss the impact a portfolio company or potential investment will have and helps the firm align its thinking with a broader framework employed by industry peers. In addition to ongoing mapping, SJF may in the future work to quantify portfolio companies’ impact using the SDG indicators.
A special thanks to SJF Venture Fellow Emily Davenport for her contributions to SJF’s initial SDG mapping exercise in 2019.
How do we know if we’re contributing to the SDGs?, The Impact Management Project
Learn More About The SDGs, SDG Compass
SDG Communications Materials, The United Nations