Lessons from the SDG-driven tech innovation ecosystem
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The world is off track to meet the SDGs by 2030. Tech innovation and digital social innovation are untapped resources in the progress toward the SDGs. Leveraging their contribution is critical if the SDGs are to be achieved by 2030.
The SDG-Driven Tech Innovation Ecosystem project is a practice-based consortium focused on clearing the way for meeting the United Nations (UN) Sustainable Development Goals (SDGs) through innovative tech-based initiatives. The consortium is comprised of the Global Steering Group for Impact Investing (GSG), The Israeli Forum for Impact Economy (Israel), FAIR (France), Social Impact Agenda per l’Italia (Italy), and maze (Portugal). Partners from Lithuania, Estonia, and Poland also collaborate on the project.
Why are tech innovation and digital social innovation relevant to the SDGs?
According to the latest Global Sustainable Development Report, published last June, progress on the 2030 Agenda[i] is far off track[ii]. At the halfway point, tech innovation[iii] and digital social innovation[iv] can be applied to accelerate progress toward the SDGs. According to a 2020 study from the World Economic Forum, deploying tech innovation solutions toward the SDGs could have a high impact across ten goals and enable 70% of the 169 targets underpinning them[v].
How is tech innovation contributing to the SDGs and how can it be leveraged?
From October 2022 to January 2023, the seven partners involved in the project mapped their own countries’ SDG-driven technology innovation and digital social innovation ecosystems. Based on the findings of each country, a thorough and aggregated analysis was conducted in the following months, informing several recommendations to better put tech innovation at the service of the SDGs.
The main findings and recommendations, organised by key market component[vi], are the following:
1. Market Participant
Key actors and entities providing impact capital (supply) or organisations championing impact-tech or digital social innovation (demand).
Findings:
- Public financing: there are several public financing schemes for the green and digital transition, but only a few expressly link their initiatives to the SDGs. These financing schemes support match funding grants for early-stage startups and equity investment into funds and startups. The funding opportunities for digital social innovation initiatives are limited compared to those for tech innovation.
- Private financing: only a few impact VCs have explicit SDG-linked portfolio management, and local VCs lack access and familiarity with emerging and underserved markets.
- Impact startups: the number of impact-aligned tech startups is growing, but only a small fraction of them explicitly reference their alignment to the SDGs and measure its impact as investors seem biased towards competitive technological innovation initiatives at the expense of impact.
- Digital social economy organisations: digital social innovation organisations are outliers in the traditional social economy sector as a few of the latter integrate digitalisation into their service delivery model.
Recommendations:
- Increase public financing schemes targeting digital social innovation organisations to foster new solutions and crown in private investment.
- Increase funding opportunities (patient capital) for early-stage impact startups.
- Foster corporate engagement to the SDGs to identify key areas needing impact investment and solutions.
- Increase charitable foundations’ support to impact accelerators, impact incubators, and digital social innovation organisations.
- Explicitly mention SDG alignment in ventures’ impact measurement frameworks and investors.
- Advocate outcomes-based funding mechanisms among current or potential impact investors.
In the Portuguese Context • Portugal Social Innovation is a government initiative aimed at promoting social innovation and stimulating the social investment market in Portugal. It is Europe's first public financial instrument to enable credit institutions and equity investors to participate directly in social innovation and entrepreneurship projects. • 37% of total VC investments are into impact startups. • Impact startups account for 4.5% of total startups. • 2% of total social economy organisations are digital social economy organisations. • Advocate outcomes-based funding mechanisms among current or potential impact investors.
2. Market Facilitator
Actors, programmes, initiatives, and systems that produce, collect, and share information and/or educate about SDG-driven tech innovation.
Findings:
- Dedicated central unit: there is a lack of coordination across ministries to promote SDG-aligned tech innovation initiatives. SDGs are often absent from public communications.
- National strategy: Portugal and Israel do not have a dedicated national strategy to address the SDGs.
- Academia: there is no coordinated higher education strategy to address the SDGs in coursework or research. Most sustainable development programmes target humanities subjects rather than STEM subjects.
- Impact intermediaries: advisory firms, impact accelerators, intermediaries, and networks seldom use explicit SDGs in their work.
- Market data: there is a lack of comprehensive data on tech-based or digital solutions for the SDGs at the local level.
Recommendations:
- Explicitly integrate the SDGs agenda into national policies and public financing schemes.
- Convene inter-ministerial task force for advancing SDG-driven tech innovation and coordinate tech-based financing initiatives across ministries.
- Promote the role of academia and intermediaries in data collection, the definition of SDG-tech taxonomy, and the design of SDG measurement frameworks.
- Integrate SDGs into STEM fields.
In the Portuguese Context • The SDG Local platform is an online tool that monitors municipalities’ contribution to the SDGs. It has identified over 600 projects and good practices. 28% of Portuguese Municipalities participate in the platform.
3. Market Regulator
Legal and regulatory frameworks that dictate the direction of travel by providing explicit definitions, standardisation, and enforceability while fostering support and recognition of the importance of SDG-driven tech innovation.
Findings:
- Taxonomy: there is no standardised taxonomy on impact or SDG technology nor an official definition of SDG-driven and SDG-aligned technology.
- Impact reporting: impact measurement and reporting are too costly for most early-stage startups. There is no SDG-specific standardised reporting framework. The EU’s growth plan for sustainable development and reporting regulations is not articulated with the SDGs.
- Public procurement: limited reference to the SDGs and ‘sustainability’ as a concept incorporated in public procurement processes.
Recommendations:
- Develop standardised taxonomy and implement SDG-specific measurement and reporting frameworks.
- Provide fiscal incentives for R&D investment linked to the SDGs.
- Promote shared impact standards among stakeholders and across multi-sector actors.
What’s next?
In Portugal, a National Roadmap for Sustainable Development 2030 will be published by the end of the year. If it meets the objectives set in the 2nd National Voluntary Review in July 2023 — strongly aligned with some of the above recommendations — Portugal will be closer to achieving the SDGs.
This report provides a roadmap for putting tech innovation at the service of the SDGs. If you want to know if your country is taking full advantage of the potential of tech innovation toward social and environmental impact, use the assessment tools available in the report and follow the roadmap.
References
[i] In 2015, UN Member States approved the 2030 Agenda for Sustainable Development. This agenda sets 17 goals as a blueprint for global economic development. It represents a commitment, at the country level, to establish national policies and actions to achieve the goals and implement monitoring systems to assess the progress made toward the goals. https://sdgs.un.org/goals.
[ii] United Nations, 2023. Times of Crisis, Times of Change: Science for Accelerating Transformations to Sustainable Development. Global Sustainable Development Report. https://sdgs.un.org/gsdr/gsdr2023.
[iii] Tech innovation involves a new way of producing, delivering, or using goods and services based on new applications of knowledge for a given end. United Nations Industrial Development Organization and United Nations Inter-Agency Task Team on Science, Technology and Innovation for the SDGs, 2022. Science, Technology, and Innovation for Achieving the SDGs: Guidelines for Policy Formulation.
[iv] Digital social innovation occurs when digital solutions are deployed to social challenges. European Commission, 2015. Growing a Digital Social Innovation Ecosystem for Europe DSI Final Report. https://ec.europa.eu/futurium/en/system/files/ged/50-nesta-dsireport-growing_a_digital_social_innovation_ecosystem_for_europe.pdf.
[v] World Economic Forum, 2020. Unlocking Technology for Global Goals. World Economic Forum. https://www.weforum.org/publications/unlocking-technology-for-the-global-goals/.
[vi] Following the GSG’s Impact Ecosystem Policy Toolkit, the word market is used in the context of this project to promote the idea of a flow of resources facilitating the exchange of goods and services for meeting and achieving the SDGs.