The importance of Sustainable Development

On the 5th anniversary of the adoption of the UN Sustainable Development Goals, amid accelerating climate change and a global pandemic that has exposed and increased existing inequalities, the concept of sustainable development has never been of greater importance. Sustainable development considers growth from a long-term perspective, by integrating ecological and social constraints into the economy. In other words, it is a form of economic development that is compatible with both environmental protection and the provision of free goods, such as natural resources, to future generations. This term first appeared in the 1987 Brundtland report, which describes it as a development that "meets the needs of the present generation without compromising the ability of future generations to meet their own needs". Built on three pillars, namely the environmental, social, and economic aspects of human activities, the overarching goal is to reconcile and to find a coherent and viable long-term balance between these three domains.

The concept of sustainable development emerged from the gradual awareness of the Earth's ecological finiteness, linked to long-term planetary limits. In other words, awareness has been raised on the environmental thresholds that humanity must not exceed to preserve the favourable conditions that have enabled it to thrive and live in a healthy environment. However, this concept has been heavily criticised. On the one side, by proponents of degrowth, who believe it is still too closely linked to economic growth. Arguably, it can be considered that there is no such thing as a sustainable use of a non-renewable resource since any positive rate of exploitation will ultimately exhaust the planet's finite supply. On the other side, sustainable development has also been criticised by those who see it as a roadblock to progress, and for whom the improvement of the quality of the environment depends on the market economy and private property.

Despite the criticisms, sustainable development remains the highest priority for the International Community. In 2015, the UN launched the “2030 Agenda for Sustainable Development” which was adopted by all United Nations Member States. At its core, seventeen so-called “Sustainable Development Goals” (SDGs), framed as an urgent need for action and partnership between both developed and developing countries. These goals target global issues such as poverty, climate change, and gender equality. While some of the goals are difficult to quantify, others have found their way into the world of finance, through mainstream investments vehicles such as ETFs and mutual funds. Indeed, an increasing number of funds explicitly target one or multiple SDGs, by investing in public companies working towards fulfilment of certain specific SDGs. Ultimately, these funds are the premise of a world where finance and sustainability are considered as complementary, not enemies.

(Sources: United Nations Economic and Social Council; SDGs United Nations)