Invest in UN SDG 9: Industry, Innovation and Infrastructure 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. Industry, Innovation and Infrastructure have a central place in UN's agenda through its SDG #9 “Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation and underpinned by 8 ambitious targets. In this article we highlight how you can contribute to UN SDG Goal 9: Industry, Innovation and Infrastructure 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, know-how, 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 9: Industry, Innovation and Infrastructure?

Sustainable and inclusive industrialization, together with innovation and infrastructure, can create productive economies that generate employment and income. They play a key role in introducing new technologies, enabling leaner international trade and efficient use of resources. This idea is embedded in SDG# 9 "Industry, Innovation and Infrastructure" and was enacted 6 years ago with the hope of a satisfying 2030 closure.

Despite the progress that has been made so far towards the realization of that goal, the world still came up short of tapping its full potential. Basic infrastructure like roads, information and communication technologies, sanitation, electrical power, and water remains scarce in many developing countries. In 2020, around 87% of people in developed countries used the Internet, compared with just 19% in the least developed countries. Things got worse during the pandemic with the factories' shutdowns, supply chains disruption, and movement restriction of people and goods. People lost their jobs and failed to make ends meet. The setback will have to be countered with accelerated efforts and increased financing to achieve SDG 9 targets by the end of this decade.

SDG Goal 9 has 8 targets set for completion by 2030:

1. Improve regional and transborder infrastructure to support economic growth.
2. Expand sustainable industrialization and raise industry's share of employment and GDP, with emphasis on double its share in least developed nations.
3. Provide affordable credit and access to financial services to small-scale industrial and other businesses.
4. Upgrade industries infrastructure to sustainable conditions by increasing resource efficiency and the adoption of clean technologies and industrial processes.
5. Promote and fund research and development activities and upgrade technological capabilities of industrial sectors, especially in developing countries.
6. Provide financial, technological, and technical support to African countries, least developed countries, landlocked developing countries, and small island developing States, to facilitate sustainable and resilient infrastructure development.
7. Promote local technology development, innovation, industrial diversification in developing countries through supportive policies.
8. Guarantee access to affordable internet and other communication technologies in the least developed countries.

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. These indicators can be tracked on the SDG Tracker.

Investors can support Industry, Innovation and Infrastructure with ESG ETFs

Today, impact investing has become the norm, with billions of dollars flooding the market in adequately 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 represents employee and consumer 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 Industry, Innovation, and Infrastructure

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 "Industry, Innovation and Infrastructure" goal, Trackinsight identifies 34 ETFs totaling $19 billion.

Top 10 Largest ETFs supporting SDG 9

1. Global X Lithium & Battery ETF (LIT): $5,990 million
2. iShares Automation & Robotics UCITS ETF (RBOT): $3,940 million
3. iShares Digitalisation UCITS ETF (DGTL): $1,512 million
4. iShares Digital Security UCITS ETF (LOCK): $1,502 million
5. Global X Autonomous & Electric Vehicles ETF (DRIV): $1,322 million
6. Global X China Electric Vehicle and Battery ETF: $1,165 million
7. L&G Battery Value-Chain UCITS ETF (BATT): $918.48 million
8. iShares Electric Vehicles and Driving Technology UCITS ETF (ECAR): $802 million
9. WisdomTree Battery Solutions UCITS ETF (W1TA): $665 million
10. Cathay Global Autonomous and Electric Vehicles ETF: $651 million

Research, innovation, and progress are done in electrification and power storage have contributed to decarbonization, sustainable industrialization, and jobs creation in developed and least developed nations, all key targets in SDG #9. 

The Global X Lithium & Battery (LIT) invests in companies involved in the lithium cycle, including mining, refinement, and battery production. Since the battery is a centerpiece in electrification, LIT provides exposure to companies contributing to that goal. As of December 1st, 2021, the fund is exposed to Materials (43%), Industrials (26%), Information Technology (16%), and Consumer Discretionary Sectors (15%). In terms of country exposure, China has the lion's share with 45.4%, followed by the United States (21.9%), South Korea (10.9%), Japan (9.8%), and Australia (5.1%) among others.

The 41 holdings include Albemarle corp. (11.02%), EVE Energy (5.87%), Tesla (5.7%), TDK Corp. (5.32%), Cotemporary (5.24%), BYD Co. (4.9%), Ganfeng Lithium (4.46%), Samsung SDI (4.29%), Wuxi Lead (4.25%) and Yunnan Energy (3.99%).

Since its inception on July 22nd, 2010, the fund has generated a cumulative gain of 250% and an annualized gain of 11.7% (as of November 30th, 2021). LIT has an expense ratio of 0.75% and trades primarily on the NYSE Arca.

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