Invest in UN SDG 8: Decent Work with ESG ETFs

The United Nations Sustainable Development Goals (SDGs) are 17 goals that all UN Member nations have agreed to achieve by 2030. They set out an ambitious mission to eradicate issues that affect our society and environment. Decent work and Economic Growth have a central place in UN's agenda through its SDG #8 “Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all" and underpinned by 12 ambitious targets. In this article we highlight how you can contribute to UN SDG Goal 8: Decent Work and Economic Growth with ESG Exchange-Traded Funds (ETFs).

17 SDGs for a better future

The Sustainable Development Goals (SDGs) are 17 goals with 169 targets set by the United Nations in 2015 as a global initiative to tackle issues that affect humans and the environment we live in, with the hope of achieving tremendous progress by 2030.

The 17 sustainable development goals (SDGs) to transform our world: 

1. No Poverty
2. Zero Hunger
3. Good Health and Well-being
4. Quality Education
5. Gender Equality
6. Clean Water and Sanitation
7. Affordable and Clean Energy
8. Decent Work and Economic Growth
9. Industry, Innovation and Infrastructure
10. Reduced Inequality
11. Sustainable Cities and Communities
12. Responsible Consumption and Production
13. Climate Action
14. Life Below Water
15. Life on Land
16. Peace and Justice Strong Institutions
17. Partnerships to achieve the Goal

Each goal has several targets and is measured quantitatively by indicators provided by private and public entities. The creativity, knowhow, technology, and financial resources from all stakeholders are necessary to achieve the SDGs in every context. The beauty of these goals is their interrelation, meaning that action in one area will affect outcomes in others. The development of those goals must balance social, economic and environmental sustainability.

To fully meet the 17 Sustainable Development Goals, the United Nations Conference on Trade and Development (UNCTAD) estimates that an investment of $3.9 trillion is needed on average each year from 2015 to 2030 for the developing nations alone.

What is UN SDG 8: Decent Work and Economic Growth?

Poverty is a major global issue that is being tackled specifically by SDG #1 "No poverty". Evidently, one of the best ways to eradicate poverty is through stable and well-paid jobs. The UN estimates that 2.2 billion people live below the US$1.90 a day poverty line and that 470 million jobs are required globally for new entrants to the labor market between 2016 and 2030, just to keep up with the growth of the global working age. We're talking about 30 million jobs per year!

Data from the International Labor Organization shows that currently 6.3% of the global population are unemployed, a rate exacerbated by the COVID-19 pandemic. Sadly, unemployment is just the tip of the iceberg. Working conditions of over 800 million men and women are poor to say the least. While working, these people are not earning enough to lift themselves and their families out of poverty. In addition, women and girls do not have equal access to equal opportunities with men and boys for employment. So, there's a lot of work to be done in that area, and that's where SDG Goal #8 comes in.

SDG Goal 8 has 12 targets set for completion by 2030:

1. Maintain economic growth per capita and target at least 7% GDP growth per year in the least developed nations.
2. Increase economic productivity across all sectors, upgrade technology and promote innovation.
3. Establish policies and access to financial services to support entrepreneurship, job creation and the growth of SME's.
4. Increase global efforts in resource efficiency in consumption and production in ways that do not harm the environment, with developed nations leading the charge through established frameworks.
5. Ensure proper employment and pay for all men and women, including people with disabilities.
6. Provide employment, education and training opportunities for the youth.
7. Eradicate forced labor, child labor, modern slavery, and human trafficking.
8. Provide a safe working environment for all and protect labor rights.
9. Set policies that promote job-creating sustainable tourism.
10. Provide domestic financial institutions with support and open up access to financial services for all.
11. Increase aid for trade support for developing and least developing nations through the proper established frameworks.
12. Develop and put into a motion a strategy for youth employment and implement the Global Jobs Pact.

To track progress, the United Nations along with all related stakeholders have established statistical indicators attached to each target. It helps parties adapt and improve actions toward making the goal attainable by 2030.

Investors can support Decent Work and Economic Growth with ESG ETFs

Today, impact investing has become the norm, with billions of dollars flooding the market in sustainably screened investments, focusing on entities that align their operations with SDG and ESG initiatives (Environmental, Social, Governance). Corporate Social Responsibility departments (CSR) went from being a cost burden to an existential necessity that represent employees and consumers values.

The change in investors' mindsets has given birth to mutual funds and ETFs that provide exposure to securities that work towards achieving ESG or SDG goals. It allows them to invest in opportunities that can provide wealth accumulation while making an impact.

List of ESG ETFs promoting Affordable and Clean Energy

Trackinsight analyzes the fact sheets and other publicly available information of all ETFs in the ESG universe. The information is screened for statements that show an explicit tilt towards specific Sustainable Development Goals. In relation to the "Descent Work and Economic Growth" goal, Trackinsight identifies 3 ETFs totaling $234 million.

3 ETFs supporting SDG 8

• Freedom 100 Emerging Markets ETF
• iShares JPX/S&P CAPEX & Human Capital ETF
• NIKKO Listed Index Fund Japanese Economy Contributor Stocks

Freedom 100 Emerging Markets ETF (FRDM) is the largest among those 3 ETFs with $108 million in assets. The fund invests in companies domiciled in emerging market countries with higher human and economic freedom scores. It allocates higher weights to freer markets with potential for more sustainable growth, more innovation and adaptability to market trends, and more efficient use of capital and labor. FRDM also excludes markets with poor human rights records and rewards those that promote personal and economic freedoms. All which are factors that align with SDG #8.

In terms of security selection, the fund selects the top 10 stocks of each included country which meet the minimum liquidity requirements, and then are market capitalization weighted within their country weights.

As of September 30th, 2021, Taiwan had the highest exposure (20.84%), followed by Chile (16%), Poland (15.9%), South Korea (15.6%) and South Africa (7.2%). On November 25th, 2021, the fund's 103 holdings included Taiwan Semiconductors (7.84%), Samsung Electronic (6.29%), BK Central Asia (4.16%), Bank Pekao (3.77%) and Mediatek (3.62%).

Since inception on May 23rd, 2019, the fund generated a cumulative gain of 32.8%. It trades on the CBOE BZX and charges 0.49% in annual fees.

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