The coronavirus pandemic has had a devastating effect on peoples’ health and livelihoods around the world. As we hope to emerge from the current crisis, we continue to be faced with the challenges posed by climate change and its implications on the social fabrics of our societies. There is a growing consensus that a post-coronavirus recovery must have a strong focus on green recovery and a Just Transition with impact investing seen as a driving effort to achieve both.
Watch our webinar with Sir Ronald Cohen and Dame Elizabeth Corley on the power of impact investing, how adapting our business practices to be more transparent in our disclosures and reporting as well introducing Impact weighted accounts, can make a positive change towards a net-zero carbon economy that will bring a range of positive social benefits such as creating green collar jobs, boosting skills and regional revitalisation.
Key messages, actions points and resources mentioned during the discussion
Impact investing is accelerating fast
ESG and impact investing are growing at a rate of 15-20 % a year and amount to 30-40 trillion US Dollars, about half of all professionally managed assets in the world. As the evidence shows that impact investing delivers risk-adjusted returns, impact is becoming an integral part of investment strategies, which leads to greater value creation across the investment chain.
Impact measurement and reporting needs to improve
We need a practitioner-led global and transparent system that ensures consistent, and comparable reporting of environmental and social impact, similar to the International Financial Reporting Standards (IFRS). The IFRS role in setting up a Sustainability Accounting Standards Board is bringing us closer to that goal. The Global Steering Group for Impact Investment’s (GSG) and Harvard Business School’s Impact-Weighted Accounts Project drives the creation of financial accounts that reflect a company’s financial, social, and environmental performance.
Private capital and enterprises play a crucial role in building back better
If we want private capital to help solve some of the most pressing social and environmental challenges initiated by the climate emergency and the coronavirus pandemic, we need to achieve more impact transparency fast so investors have the information they need to invest with impact.
The power of pension funds
With more than 30 trillion US Dollars in pension funds globally, pension trustees have many reasons to consider investing with impact. The Institute’s Impact Investing Principles for Pensions provide four practical guidelines on how pensions can pursue an impact investing strategy and legal paper shows the compatibility of fiduciary duty and impact investing. Our Adopters Forum, a peer network, further helps pension funds to implement the Principles in practice.
Consumers and shareholders can drive change
There is a growing trend of consumers and shareholders demanding more transparency on the positive and negative impacts of companies around the world. Campaigns such as Make My Money Matter and organisations such as Share Action help them to make their voices heard.
A just transition is vital in shifting to a net-zero carbon economy
Any efforts to tackle the climate emergency through the deployment of green finance such as green sovereign bonds for example, must consider the impact on people, societies, livelihoods, health and living standards. That is why we want to see a shift to a net-zero world that is inclusive and socially beneficial – a just transition. The coronavirus pandemic, which has devastated communities and economies around the globe, made this even more apparent. You can find out more about the Institute’s proposal for a Green+ Gilt emphasising the strategic potential for a green sovereign bond to scale up the UK’s drive to a net-zero carbon economy with well-defined social and economic benefits here.