The Sustainable Development Goals (SDGs) were adopted in 2015 by UN member states as a shared global framework to address the world's most pressing challenges. The 17 interconnected goals cover a broad range of issues, such as poverty eradication (SDG 1), climate action (SDG 7), quality education (SDG 4) and gender equality (SDG 5).¹ These goals aim to promote inclusive economic growth, environmental protection and social equity, forming the foundation of the UN's 2030 Agenda for Sustainable Development.

While originally developed to guide national governments and policy agendas, the SDGs have increasingly gained traction in the private sector.² Businesses and investors are integrating SDG considerations into strategies, disclosures and capital allocation decisions. For investors, the SDGs provide a structured framework to understand global priorities and align long-term financial objectives accordingly.

SDG Investing Is Gaining Momentum

Since 2015, both sovereign and corporate issuers have increasingly turned to SDG-linked bonds to finance sustainability objectives.³ Governments such as Indonesia, Mexico and Chile have issued SDG bonds tied to national priorities across education, health and climate resilience – with clear use-of-proceeds aligned to specific SDGs. On the corporate side, issuers are adopting SDG-aligned frameworks to raise capital for projects which contribute to goals such as affordable clean energy, and sustainable cities and communities, promoting transparency and enabling investors to assess measurable outcomes.

Issuance of SDG-linked bonds has expanded significantly over the past decade, with corporate issuances growing from a few dozen to over 2,200 in 2024; government issuances followed a similar trajectory, to over 650.⁴ This rise in issuance reflects growing investor appetite for sustainability-linked investments.

Why Investors Are Turning to the SDG Framework

The SDGs have become a widely used framework in sustainable investing. According to the 2024 Assessment Report by the UN's Principles for Responsible Investment, over 50% of reporting asset owners and asset managers use the SDGs to measure sustainability outcomes across their portfolios.⁵ This growing adoption reflects the framework's practicality, transparency and alignment with both voluntary and emerging regulatory standards.

One of the key benefits of the SDG framework is its clarity. While Environmental, Social and Governance (ESG) investing has gained traction in recent years, the landscape of ESG data and disclosure standards remains fragmented. Investors face a range of definitions, methodologies and data sources that can vary by markets and providers. In contrast, the SDGs offer a globally accepted framework built around 17 goals, 169 underlying targets and over 200 indicators to measure progress. The SDGs are also embedded in many major international disclosure and reporting frameworks, such as the Global Reporting Initiative, the EU's Sustainable Finance Disclosure Regulation and the International Sustainability Standards Board. This standard approach offered by the SDG framework helps reduce ambiguity, improving the quality and comparability of disclosures.

Importantly, the SDGs offer broad coverage, addressing priorities across the full ESG spectrum. For example, SDG 8 (Decent Work and Economic Growth) encourages labour rights protection and safe working environments, while SDG 16 (Peace, Justice and Strong Institutions) emphasizes reducing corruption and bribery. As a result, the SDGs provide a comprehensive lens through which investors can align capital with long-term, real-world impact across sustainability themes, potentially contributing to greater thematic and sector diversification within portfolios.

The SDG framework has demonstrated its effectiveness in driving measurable progress on global priorities, with 17% of assessable targets already achieved or on track – including SDG 9.c (Access to Information and Communication Technologies and the Internet) and SDG 7.b (Investing in Energy Infrastructure).⁶ However, broad implementation challenges remain. According to The Sustainable Development Goals Report 2024, 48% of assessable targets still show moderate or severe deviation, and 17% have fallen below the 2015 baseline levels.⁷ These reflect the urgent need to realign with the 2030 agenda and underscore the value of the SDG framework as a tool to help identify where financial capital is required.

According to the UN Conference on Trade and Development, achieving the SDGs will require about USD $5 -$7 trillion a year until 2030,⁸ including investments in infrastructure, clean energy, water and sanitation, and agriculture. Significant funding gaps are estimated to range between USD $2.5 trillion to USD $4 trillion per year.⁹ This unmet capital demand creates an opportunity for investors to contribute to global progress while potentially capturing sustainable long-term returns.

The SDG framework can help investors identify opportunity-rich sectors where sustainability themes intersect with long-term financial growth possibilities. Sectors such as healthcare, clean energy, education and infrastructure are directly aligned with the goals. These sectors are expected to experience structural expansion driven by demographic shifts, policy support and technology adoption.

Leveraging the SDGs also gives investors the possibility to spot untapped opportunities in various markets. Tools such as the SDG Investor Map¹⁰ provide country-level insights on commercially viable investment themes, backed by actionable metrics. Several institutional investors have launched blended finance vehicles targeting SDG-aligned opportunities in emerging markets, aiming to mobilize private capital towards underserved regions¹¹.

Conclusion

The SDG framework provides investors with both a directional compass and an actionable toolkit. By incorporating SDG indicators into investment analysis, sector targeting and regional allocation, investors can potentially move from ESG objectives to measurable outcomes. As disclosure standards evolve and sustainable investment expands, investors who adopt SDG-aligned thinking today may be better positioned to capture long-term growth opportunities, mitigate ESG risks and contribute to global developments.

For Canadian institutional investors only.

The information contained herein is for information purposes only. The information has been drawn from sources believed to be reliable. The information does not provide financial, legal, tax or investment advice. Particular investment, tax or trading strategies should be evaluated relative to each individual's objectives and risk tolerance.

This material is not an offer to any person in any jurisdiction where unlawful or unauthorized. These materials have not been reviewed by and are not registered with any securities or other regulatory authority in jurisdictions where we operate.

Any general discussion or opinions contained within these materials regarding securities or market conditions represent our view or the view of the source cited. Unless otherwise indicated, such view is as of the date noted and is subject to change. Information about the portfolio holdings, asset allocation or diversification is historical and is subject to change.

This document may contain forward-looking statements (“FLS”). FLS reflect current expectations and projections about future events and/or outcomes based on data currently available. Such expectations and projections may be incorrect in the future as events which were not anticipated or considered in their formulation may occur and lead to results that differ materially from those expressed or implied. FLS are not guarantees of future performance and reliance on FLS should be avoided.

TD Global Investment Solutions represents TD Asset Management Inc. ("TDAM") and Epoch Investment Partners, Inc. ("TD Epoch"). TDAM and TD Epoch are affiliates and wholly-owned subsidiaries of The Toronto-Dominion Bank.

¹Source: https://sdgs.un.org/goals

²https://sdg.iisd.org/commentary/guest-articles/businesses-are-committing-to-the-sdgs-but-what-about-their-impact/

³Source: https://unctad.org/publication/financing-sustainable-development-report-2024

⁴Source: Bloomberg Finance L.P.

⁵Source: UN PRI, Global responsible investment trends: inside PRI reporting data  https://www.unpri.org/download?ac=23004&adredir=1#page=13

⁶Source: UN, The Sustainable Development Goals Report: https://unstats.un.org/sdgs/report/2024/The-Sustainable-Development-Goals-Report-2024.pdf )

⁷Source: UN, The Sustainable Development Goals Report: https://unstats.un.org/sdgs/report/2024/The-Sustainable-Development-Goals-Report-2024.pdf )

⁸Source: https://unctad.org/publication/financing-sustainable-development-report-2024

⁹Source: https://unctad.org/publication/financing-sustainable-development-report-2024

¹⁰For more details about SDG Investor Map, please refer to United Nations Development Programme website: https://sdgprivatefinance.undp.org/leveraging-capital/sdg-investor-platform

¹¹Source: https://www.convergence.finance/blended-finance