The impact investment universe is growing and becoming increasingly accessible, delegates at ESG Clarity’s Global ESG Summit heard.
During the second panel discussion, How the investment industry can be part of the climate change solution, Sophie Kennedy, joint-CEO at EQ Investors and ESG Clarity Committee member, said its an exciting time for impact investing as accessibility improves.
“We recently invested in an emerging market green bond fund, a year ago we wouldn’t have been able to invest in that kind of strategy,” she said.
Sarah Bratton Hughes, global head of sustainability solutions at Schroders, agreed but said there are still some barriers and myths to overcome. In the US where she is based, there is still a myth that impact is concessionary. “I like to ensure investors it’s not,” she added.
When it comes to regional differences in impact investing Bratton Hughes added Asia is ahead of the game when it comes to biodiversity and natural capital. Rahul Chadha, chief investment officer at Mirae Asset Global Investments (HK), added he is encouraged that even the laggards in emerging markets are talking about improving impact.
Chadha spoke about another barrier to impact investing: measurement. There is still no universal framework for measuring impact and Chadha agreed “we need more harmony and standards for disclosure”. Mirae uses internal scorecards that are customised for different industries, and Schroders uses proprietary tools.
On the wealth management side, Kennedy said EQ Investors uses the UN SDGs to “bring impact to life” for clients, as well as an impact calculator and an annual impact report. She added the simplest tool they use is the Impact Measurement Project framework, which looks to differentiate intention.
This will also help close the ‘credibility gap’ said Barry Cowen, senior investment manager at Sanlam Wealth. Connecting the dots between private investors and businesses that are driving change to see capital gets to the best areas in the most effective way. “And make sure Mr and Mrs Jones understands all this measurement and metrics,” he said.
