Demystifying SDG Scores: What They Mean for Impact Investors

In today’s investing landscape, both institutional and retail investors are increasingly looking to align their capital with causes that matter—from climate resilience to reducing inequality. Against this backdrop, the United Nations Sustainable Development Goals (SDGs) have emerged as a shared global framework for tackling the world’s most urgent challenges.

Launched in 2015, the 17 SDGs aim to eradicate poverty, promote clean energy, improve healthcare, and build sustainable cities, among other priorities. For impact-oriented investors, aligning portfolios with these goals presents both an opportunity and a challenge. The goals are broad, complex, and interconnected—so how do you measure real contribution or progress?

This is where SDG Scores come in.

With the increasing demand for transparency and measurable impact, SDG Scores are becoming essential tools for investors. They offer a way to assess how well companies, funds, or portfolios align with specific sustainability objectives, enabling clearer benchmarking, reporting, and decision-making.

Whether you’re a portfolio manager seeking alignment insights or a retail investor aiming to put your money where your values are, SDG Scores can help bring purpose and precision to your investment strategy.

In this blog, we’ll take a deep dive into what SDG Scores are, how they differ from ESG Ratings, how they’re calculated, and why they’re becoming increasingly important in shaping the future of impact investing.

SDG Scores measure how well a company, country, investment fund, or project aligns with one or more of the 17 SDGs established by the United Nations. These goals cover a wide spectrum of global priorities—from No Poverty (Goal 1) and Climate Action (Goal 13) to Partnerships for the Goals (Goal 17).

By translating sustainability efforts into quantifiable results, SDG Scores offer investors, policymakers, and stakeholders a clearer picture of whether an entity is contributing to—or falling short of—these global ambitions.

Read more: ESG Scores: What is it, And How Are They Calculated?

SDG Scores are utilized by a variety of stakeholders such as:

• Impact investors seeking purpose-aligned investments
• Asset and fund managers integrating ESG and SDG factors into their strategies
• Development finance institutions and governments to monitor and guide policy outcomes
• ESG and sustainability data providers who deliver tailored insights to clients

Calculating SDG Scores involves combining quantitative data with qualitative assessments to evaluate an entity’s alignment and contribution to specific SDGs.

Data Sources

• Company disclosures such as annual reports and sustainability reports
• Third-party databases and benchmarks
• Non-financial indicators, such as Greenhouse Gas (GHG) emissions, water use, and gender diversity

Mapping Activities to SDGs

Each business activity is assessed for its relevance to specific SDGs. For example:

• A solar energy company is aligned with SDG 7 (Affordable and Clean Energy).
• A microfinance institution may support both SDG 1 (No Poverty) and SDG 8 (Decent Work and Economic Growth).

Scoring Models

Models typically consider:

• Quantitative metrics, such as revenue share from SDG-aligned products, emissions data, or number of people positively impacted
• Qualitative factors, such as corporate policies, governance frameworks, and stated future commitments

These dimensions are aggregated into an overall SDG score, often on a 0–100 scale.

Read more: Can AI Reinvent How We Achieve Our SDGs? 

SDG Scores are more than just numbers—they reflect how well a company or fund is positioned to address long-term sustainability challenges and opportunities.

Scores offer visibility into real sustainability efforts, helping restore trust among stakeholders who have grown wary of vague or inflated ESG claims.

They allow cross-sector and cross-industry benchmarking. For example, SDG 13 (Climate Action) scores can be compared between a transportation company and a financial services firm, offering insights into sector-specific contributions.

Companies can be held accountable for their claims. For instance, a firm reporting robust performance in SDG 13 must demonstrate actual emissions reductions or investments in climate resilience—not just marketing expenditures.

For impact-focused funds and ESG strategies, SDG Scores provide a compelling way to communicate progress and impact to clients, partners, and the public.

Understanding SDG Scores goes beyond reading a number. Scoring systems differ across providers, so it is critical to understand the underlying methodologies.

Alignment vs. Contribution Not all alignment is equal.

• Alignment indicates that a company’s activities are in line with the themes of certain SDGs.
• Contribution measures actual, positive impact—such as lives improved, emissions avoided, or access expanded.

Merely referencing SDGs in a sustainability report doesn’t equate to meaningful action.

A red flag arises when a company performs well on a single SDG but poorly across others.
For example, a firm may excel in SDG 9 (Industry, Innovation, and Infrastructure) while lagging in SDG 8 (Decent Work and Economic Growth) due to questionable labor practices. This kind of imbalance underscores the importance of looking beyond surface-level indicators to understand a company’s full sustainability profile.

While ESG Ratings and SDG Scores are both tools used to evaluate corporate sustainability, they differ in focus, methodology, and application.

ESG Ratings assess how a company manages material environmental, social, and governance issues that could influence its financial performance or broader impact. They draw on data such as emissions, labor practices, governance structure, and supply chain risks. ESG Ratings can serve both risk management and impact assessment purposes, depending on the provider’s methodology—some focus primarily on financial materiality, while others also consider a company’s external impacts on society and the environment.

On the other hand, SDG Scores are explicitly impact-oriented. They measure the extent to which a company contributes positively or negatively to the UNSDGs, such as climate action, clean water, or reduced inequalities. These scores aim to track alignment with global development goals rather than business performance or risk exposure.

Together, ESG Ratings and SDG Scores offer a complementary view—ESG Ratings provide insights into both the sustainability performance and risk exposure of a company, while SDG Scores help investors understand a company’s contributions to global social and environmental outcomes within a globally recognized framework. For investors seeking both financial resilience and meaningful impact, using both metrics can support more informed investment decisions aligned with their values.

Read more: ESG Risk Ratings vs ESG Impact Ratings

Despite its usefulness, SDG scoring involves several challenges such as:

Not all companies report SDG-related data consistently, particularly small businesses or those in emerging markets. The lack of standardized disclosures makes accurate comparison difficult.

Different ESG data providers use different scoring models, many of which are not publicly disclosed. This lack of transparency can create confusion and erode trust, as investors may not understand how the scores are calculated.

Quantifying diverse impacts into a single score involves the risk of losing nuance. For example, SDG 13 (Climate Action) encompasses not only emissions data, but also climate resilience, adaptation strategies, and policy alignment—factors that are difficult to capture in a single number.

To make the most of SDG Scores, impact investors should:

Not all SDGs are relevant to every business. Investors should focus on goals that are most aligned with the company’s core activities and the investor’s impact thesis.

Scores alone are not enough. Engage directly with companies to understand their actual contributions and intentions. Ask how their activities are aligned with specific SDG targets..

Seek funds specifically designed to support SDGs, such as SDG impact bonds or sustainable development ETFs. Examples include the UBS Sustainable Development Bank Bond Fund or similar vehicles.

Ensure that asset managers provide transparency on how fund holdings align with specific SDGs. Look for funds with robust reporting and measurable impact metrics.

Read more: How Financial Institutions Can Leverage SDG Impact Data for Smarter Investments

As capital markets evolve to meet the demand for a more sustainable future, SDG Scores are emerging as an essential tool for investors seeking both purpose and performance. They go beyond risk mitigation to highlight where investments can drive real, measurable change. By incorporating SDG Scores into their decision-making, investors move from passive alignment to active contribution—funding the development of solutions to the world’s most pressing challenges. In doing so, they not only future-proof their portfolios, but also help build a global economy that is equitable, resilient, and impactful by design.