Imagine a world where financial markets actively reward companies for fighting climate change and driving social progress. This vision took a bold leap forward when the CFO Coalition for the SDGs significantly expanded the SDG-linked bond market.

It all started with a question: How can companies align their financial strategies with the global need for sustainable development? The answer came in the whitepaper SDG Bonds and Corporate Finance, which laid the foundation for a new breed of financial instruments tying corporate performance to the Sustainable Development Goals (SDGs).

The inaugural SDG-linked bond — issued by an Italian energy company, among the world’s largest electric utility companies — raised over $4 billion. The bond directly connected financial incentives to the company’s progress on key sustainability targets, including (a) reducing carbon emissions and (b) expanding renewable energy capacity. This approach not only embedded sustainability into the company’s financial strategy but also sent a clear message –accountability drives action.

The bond didn’t just raise billions—it ignited a new market. Today, sustainability-linked bonds have grown into a multi-billion-dollar force for good, offering companies a powerful way to embed SDG principles into their financial DNA. To encourage the momentum, the Coalition has already mobilized $282B against a bold target of aligning $500B in corporate investment toward the SDGs by 2025.

Accounting for 90 per cent of businesses worldwide, and the majority of suppliers within value chains, SMEs are a key but underserved driver of private sector sustainability progress. In fact, 87 per cent of companies surveyed in the SDG Private Sector Stocktake cited the inability to influence value chains as the biggest barrier to SDG progress. With value chains responsible for over 60 per cent of most companies’ emissions, and with increasing regulatory pressures for supply chain transparency, the demand for effective supplier engagement solutions is more urgent than ever.

To address this gap, the UN Global Compact piloted the Sustainable Supplier Impact Programme (SSIP) in 2023 to promote sustainability among suppliers, particularly SMEs, through capacity building and direct engagement with their large company customers. Close to 2,000 suppliers participated globally.

Overall, 89 per cent of participating suppliers agreed that they are now better equipped to address and take action on sustainability issues, and 74 percent have already developed action plans. These initiatives encompass a wide spectrum of efforts, including an increased focus on energy efficiency, the installation of solar panels, the pursuit of ISO 5000 certification, gender equality initiatives such as placing women in historically male-dominated roles, and the establishment of monitoring and evaluation frameworks for sustainable practices.

The lessons learned from SSIP contributed to the development of SPARK, a new global community offering tailored guidance and peer learning opportunities to SMEs all over the globe, as well as capacity building resources in over 25 languages.