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imfino News Wire roundup: Impact Investing – The Road to Sustainability

SDG 13: Climate action, SDG 17: Partnerships for the goals,
 Jun 2018

With the UN Sustainable Development Goals agenda clearly outlined and a deadline fixed (2030), government, public and private actors are now under pressure to take action. The SDGs have become benchmarks for the impact performance of investments and investors are increasingly interested in investments that will not only generate profit, but also benefit society and the environment.

Welcome to our first roundup, which provides examples of how different public and private actors are reacting to this heightened awareness of the need to create a sustainable future.

Huge growth in ESG investments at Cambridge Associates

On May 2, Cambridge Associates, a leading global investment firm announced that assets placed in ESG (Environment, Social, Governance) investment client portfolios have more than doubled over the past five years to approximately $9.5 billion from $4 billion in 2012. More than 130 of the firm’s clients, including endowments & foundations, pensions and families have already invested in ESG and impact strategies. And a recent survey shows that 61% of them plan to increase their impact-oriented allocation over the next five years. “ESG and impact investing – what we collectively refer to as mission-related investing – is a core component of many clients’ investment programs today. More and more, our clients want to integrate environmental and social priorities with their financial objectives,” Noel O’Neill, global head of investment research at Cambridge Associates explained the growing trend in his firm.

New social enterprise accelerator launched

FHI 360 is an international, non-profit human development organization dedicated to promoting integrated, locally driven solutions in all areas of life, including health, education, nutrition, environment, economic development, civil society, gender equality, youth, research, technology, communication and social marketing. In May, FHI 360 launched a new subsidiary, FHI Ventures, a social enterprise accelerator with the special purpose to assist high-impact, early-stage social enterprises. FHI Ventures will work closely with such early-stage companies that offer a new product or service designed for social good, providing them with the support and funding they need to get their business off the ground.

More traditional companies get on board

Traditionally-minded companies such as Merrill Lynch and Merrill Edge, both spin-offs of the Bank of America, likewise show themselves prepared to honour the impact investing trend. In May, Merrill Lynch and Merrill Edge launched five new portfolios incorporating environmental, social and governance (ESG) factors. “The demand for ESG-integrated investment options has increased as more investors are seeking a ‘double bottom-line’ approach to investing and a way to add an environmental or societal impact objective to a financial return,” said Chris Hyzy, chief investment officer for GWIM. His company's decision is fully in line with the Bank of America's commitment to fostering sustainable growth and combating global challenges such as climate change, clean water and affordable housing.

But public and private players in the impact investing field are not looking to go it alone  – the trend increasingly goes in the direction of joining forces and forging synergies. Meetings and summits offer opportunities to form networks and team up to combat global challenges that affect all of us:

New UN Network for Sustainable Finance meets

On April 12 and 13, for instance, nearly 20 of the world’s leading financial centres gathered in Milan, for the inaugural meeting of a new international network to accelerate green and sustainable finance. This network, established by UN Environment, was kicked off in Casablanca in September 2017 with the aim of increasing cooperation among global players. It currently has 18 members.

“Financial centres are the key places in the global economy which determine where capital flows,” Erik Solheim, Executive Director of UN Environment, explained the rationale behind the network. “We’re delighted to convene this network of passionate leaders and aim to make a real difference for climate action and sustainable development.”

Sustainability Awareness Bond planned

On April 20, the European Investment Bank (EIB) announced on the margins of the IMF/World Bank Group Spring Meetings plans for a new debt product: a Sustainability Awareness Bond, highlighting the Bank’s key role in sustainable finance both in and outside of Europe.

The purpose behind the bond, which will initially focus on the water sector, and then gradually also on other areas with positive social impacts, such as health and education, is to support the achievement of the United Nations Sustainable Development Goals by further unlocking investment in social, green and sustainable projects. Valdis Dombrovskis, Vice-President of the European Commission, said the European Union had from the beginning spearheaded attempts to create an international system for green and sustainable finance. „The EIB is a pioneer in the area. The bank launched the world's first green bond in 2007, and remains one of the most active green bond issuers.“

Schwarzenegger opens climate action world summit

On May 15, the second R20 AUSTRIAN WORLD SUMMIT took place in Vienna with many renowned international climate experts from politics and business among the participants. R20 – Regions for Climate Action was founded in 2010 by Austrian-born former Californian Governor Arnold Schwarzenegger. Focusing on climate action, the aim of this annual conference is to bring together the key players in the field. Aside from important partners from business and civil society side, R20 is closely affiliated with the climate protection initiative of French President Macron – the ONE PLANET SUMMIT and Californian governor Jerry Brown's initiative Global Climate Action Summit. The results of the conference will be presented at the next UN climate protection conference in Katowice, Poland, in December.


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