The findings from Attitudes of Banking Customers Towards the UN SDGs, recently released by GEFI and the UKIFC, found that 80% of Global North respondents and 89% of Global South respondents were willing to pay more for an SDG-aligned financial product. On average, the respondents were willing to pay a premium of up to 4.4%. That’s a significant amount, a clear demonstration that this is becoming more and more important to financial product clients all over the world.
There were variations in feedback that were most evident in age, with the lowest (18-24 year olds) and highest (65+) being willing to pay the lowest premium (3.8% and 2.1%, respectively). This is likely due to differences in awareness. Younger respondents are in the process of learning about financial products and exploring what works best for them, while older respondents may have concerns that impact-oriented investing may not be as effective as traditional investing. In both cases, clear educational tools and resources would be beneficial. Luckily, more and more research is finding that investing from a sustainability-backed approach does well to mitigate risk, tends to be less volatile, and is economically profitable.
When developing these financial products, financial institutions have an opportunity to impact genuine positive change. The OECD’s Framework for SDG Aligned Finance presented this beautifully with two primary objectives:
- Equality: resources should be mobilised to leave no one behind and fill the SDG financing gaps, and
- Sustainability: resources should accelerate progress across the SDGs.
This is pivotal as it emphasizes the need to make socially conscious decisions while addressing the SDGs, to ensure that investments in one area are not detrimental to another. For instance, suddenly shutting down all mining operations may be better for the environment, but it could leave the local population struggling if there is no other industry around. SDG financial products must be carefully designed to maximize positive benefit while mitigating the negative.