The UN Global Compact CFO Task Force, a body that aims to inspire the financial managers of large companies to commit to the creation of long-term shared and sustainable value, has announced the pledge by its associated companies to invest 500 billion dollars over the next five years to support the United Nations Sustainable Development Goals (SDGs). The taskforce, which is co-chaired by Enel CFO Alberto De Paoli, also aims to involve hundreds of other companies in the initiative, thereby triggering a multiplier effect that could mobilize thousands of billions of dollars.
The decision was announced on September 20, during the course of “Financing a Sustainable Future - CFO Insights,” a side event at the 76th General Assembly of the United Nations. The 60 Chief Financial Officers that currently belong to the taskforce will collectively invest 500 billion dollars in the coming five years to help achieve the Sustainable Development Goals (SDGs). They have also made a commitment to linking almost 50% of all corporate finance to sustainability performance, and are planning the issue of new sustainable financial tools, including sustainability-linked bonds like those pioneered by Enel.
Indeed, in 2019 Enel was the first company in the world to issue SDG-linked bonds. In 2020, the Group then introduced two more sustainability-linked financing instruments with SDG-linked loans and revolving credit facilities. Enel’s example inspired various global companies, which also issue their own bonds linked to sustainability targets. And in the European Union, as of January 2021, the European Central Bank (ECB) accepts the bonds with coupons linked to one or more of the environmental goals as “eligible” collateral. This is as a guarantee for credit operations, within the Eurosystem for banks and for Asset Purchase Programs (APP) and Pandemic Emergency Purchase Programs (PEPP) managed by the ECB. The substantial financial commitment announced by the Task Force is destined to grow even more as the CFOs aim to recruit hundreds of other companies committed to the Global Compact. That is the UN initiative which was created to encourage companies all over the world to integrate sustainability into their strategies.
The intention is to create a “global movement” of CFOs with the end goal of mobilizing thousands of billions of investment each year to support the achievement of the Sustainable Development Goals. The relevant sectors are: sustainable infrastructure, renewable energies, water, health, nutrition and farming, gender issues and working conditions. It is also hoped that this will lead to the creation of long-term shared sustainable value, boosting awareness of the transformational impact that companies can have on the financial markets, the global economy and society as a whole.
“With this commitment we are marking a necessary stage on the journey that began in December 2019, when a small group of CFOs began to work together based on a vision of promoting the integration of sustainability into business operations,” says Alberto De Paoli. “Now we aim to further increase awareness and contribute to creating the environment necessary to attract more and more capital towards sustainable development.”
To enable companies to deploy billions – and potentially thousands of billions of dollars – towards the achievement of the SDGs, the CFO Taskforce has created a complete governance and management framework, the CFO Principles on Integrated SDG Investments and Finance. Its main points include the importance of setting targets that promote and measure companies’ contributions, focusing corporate strategy on sustainability, pinpointing useful financial tools and ensuring the transparency and accuracy of information.
Significant investments and financing that build healthy societies and markets and create shared and distributed value, will inevitably lead to a new concept, namely stakeholder capitalism, in which sustainable companies will grow and prosper, creating value for everyone. This promises to be a truly exciting journey.
To all CFOs all around the world: join us in writing a new story for business and finance this century!