Sustainability integration for sovereign debt investors: engaging with countries on the SDGs

Abstract

Investors recently adopted a novel approach to sustainable investing: engaging with countries to advance sustainable development. But engaging with sovereign entities on sustainability challenges, like the Sustainable Development Goals (SDGs), is complex. To guide sovereign debt investors in operationalizing this new sustainable investing strategy, this methodology and policy paper creates a framework that navigates the sovereign engagement process. The framework answers three questions: (i) who to engage with; (ii) what to engage on; and (iii) how to engage. First, countries are prioritized based on the investor's investment exposure and the country's progress on the SDGs. Second, using public data, SDGs and sub-targets are identified that face slow progress, thus being priorities to engage on. Third, a detailed roadmap is provided that offers a systematic approach to engaging with the identified country on selected SDG(s). This sovereign SDG Engagement Framework aims to help investors and countries achieve their shared sustainability objectives.