The Role of Green Investments in Driving UNSDGs

Sustainable investments allocate capital to companies, projects, or funds that aim to generate positive social and environmental outcomes alongside financial returns.  This approach has gained a lot of traction recently, with approximately 85% of investors indicating that sustainability is a key consideration in their investment strategies.

The potential of sustainable investments to address global challenges such as climate change, social inequality, and resource scarcity is immense. Innovating solutions and the adoption of these solutions to tackle these global challenges are often costly. The “green premium” attached to sustainable products and services can be reduced through financial tools like green investing. According to the United Nations, achieving all 17 Sustainable Development Goals (SDGs) by 2030 will require $2.5 trillion annually. This underscores the urgency of transforming private money markets and redirecting cash flow away from sectors like fossil fuels that hinder sustainable progress.

Despite its promise, current sustainable investment practices have fallen short of their potential impact. Many companies commit to sustainable investor initiatives like the Principles for Responsible Investment (PRI), but data from the International Institute for Sustainable Development (IISD) suggests these organizations don’t necessarily invest more sustainably than their peers, which calls for stronger mechanisms for measurements and regulations to ensure the efficacy.

Traditional green investment strategies, such as negative screening (which excludes companies in “sin industries”), have limited tangible impact. Such approaches don’t necessarily direct capital toward companies creating positive change. Fortunately, newer strategies, like ESG-themed investments, are gaining momentum, seeing the highest growth in recent years. By focusing on purposeful investments, these strategies foster green innovations and digital transformations that tackle climate change and promote inclusive growth. Corporate Venture Capital (CVC) is one way this is happening, which incubates sustainable breakthroughs by investing in early-stage innovations and providing the strategic support necessary to scale the solutions.

For green investments to serve as a vehicle for global change, robust measurement frameworks and stronger regulations are essential. Stakeholders must move beyond passive strategies and mitigate the risks of greenwashing to prioritize targeted, purpose-driven investments that create tangible impact. By focusing on long-term value and transformative innovation, these investments can drive meaningful environmental progress and accelerate the transition to a sustainable future.

<span class="story_highlight">Research is based on information from New York Life Investments, International Institute for Sustainable Development, CNote, illuminem, Real Sustainability Center, ESG Today and Carbon Collective.</span>