The Sustainable Development Goals can also be referred to as the Global Goals. Essentially, they comprise a set of objectives within a universal agreement that sets out vision, principles, and commitments to a fairer and more sustainable world for all. Over the years, these goals have gained momentum within the global capital markets because they highlight the link between investments and achieving these goals.
In response to this growing momentum, several financial and social approaches that adapt the SDGs to an investable context have emerged from several institutions and bodies. Undoubtedly, the SDGs’ practical and political significance emphasizes how closely related all the objectives are to one another. Consequently, failing to see this will stifle the bravery to take action in the areas that require more targeted efforts to improve various outcomes.
In this article, we will consider how social finance and social impact can work together to achieve Sustainable Development Goals (SDGs).
What is social finance?
The MaRS Centre for Impact Investing defines social finance as an approach to managing money to solve societal challenges. Also, Rachel Kalbfleisch of the International Development Research Centre (IDRC) defines it as a collection of approaches to money management that create value for society or the environment, often while generating a financial return.
Put differently, the term “social finance” refers to a variety of strategies that utilize funds such as microloans, community investments, and socially conscious investments to improve society or the environment. This approach is emerging as an efficient institutional instrument to help finance the SDGs as it seeks to generate both financial returns and desirable social and environmental outcomes. More broadly, Social Finance examines the relationship between financial instruments and environmental, social, and economic challenges.
What is social impact?
“Social impact” refers to any noteworthy or constructive adjustments that resolve or at least confront issues of social injustice and obstacles. By embracing conscious and purposeful actions or activities, businesses or organizations can achieve social impact in their operations and administrations.
The movement towards social accountability is no longer sector-specific. Likewise, social implications are becoming increasingly relevant to society in terms of how it judges business operations and individual choice of purchase. Various facets of our lives will prosper when one segment of society prospers. Hence, there is a need for a more radical embrace of social impact across all aspects of society.
Embracing Social Finance and Social Impact to achieve the SDGs
Social finance and social impact are instrumental in driving progress as they both leverage financial resources to drive social good. A staggering amount of funding is required to achieve the Sustainable Development Goals. As a result, there is a need to prioritize the means of implementation such as the mobilization of financial resources, data, and institution, capacity-building, and technology. By and large, attaining this goal requires the financial sector to be aligned with social impact development.
Now more than ever, financial systems must embrace and support the social and environmental well-being of present and future generations. This also involves aligning with broader sustainable development goals. A great way to begin is by reevaluating implicit presumptions about how financial systems operate. Accordingly, financing impact-driven firms, a crucial strategic approach, will require strengthening the current funding options.
Accomplishing long-lasting outcomes begins with developing a variety of solutions through a range of initiatives and solid partnerships both locally and globally. Without a doubt, the adoption of creative financing solutions is imperative to close the SDG budget gap. Likewise, social impact and social finance are crucial tools that can be used to advance the SDGs and bring about impact-driven change for businesses, communities, and individuals.
Conclusion
In conclusion, it is the responsibility of various public and private sector stakeholders to take action towards the SDG implementation. By and large, this also requires crucial players such as pacesetters, framework developers, data producers, research providers, regulators, and international networks of investors. A more sustainable and equitable future can be achieved through the SDGs. Even more, social finance and social impact are crucial instruments to accomplish these objectives.
By Peace Omenka, Pactman Blog