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The full breadth of impact opportunities is being most commonly captured using frameworks referenc- ing the Sustainable Development Goals (SDGs) developed by the UN3
. In 2015, the 193 member-states
of the United Nations developed and adopted the SDGs, which have subsequently gained significant traction. Trustees and the wider investment community increasingly view the SDGs as guidance for a list of deserving goals, which trustees can choose to address broadly, or select the specific goals most important to them.
Achieving and measuring impact
Although implementing impact strategies sounds attractive, ensuring capital has a positive impact is not always straightforward. It is important to understand the type of companies, products and services that are material to impact goals. Deciding which metrics to use to measure impact also presents a challenge – easy solutions are not often apparent. The investment and academic communities are working hard to address this. The University of Cam- bridge Institute for Sustainability Leadership (CISL) Investment Leaders Group, of which Aon is a mem- ber, has developed the Investment Impact Framework4
. This identifies six core goals that align with the
SDGs, including three environmental and three social aims, and measures progress towards meeting these goals using simple metrics. Frameworks such this as are expected to play a valuable role in the development of ideal quantitative metrics for impact investing in future. Additionally, qualitative assessments will have a role to play in building a holistic view of impact investments – qualitative scrutiny of individual investments can lead to an improved understanding of the underlying investment rationale, impact and sustainability challenges.
Looking forward Positive sentiment, interest and regulation around responsible investing is continuing to grow5
. In turn,
impact strategies are set to become an increasingly important part of trustees’ future investment consid- erations. For many, the ultimate question will be how to implement these strategies. Our work with clients has shown it is important to engage as early as possible: to build understanding of the range of opportunities, challenges, and different ways to introduce impact investments to their portfolios. The potential for financial rewards and risk mitigation, while making a positive contribution to environmental and social challenges, makes this a compelling proposition for all pension scheme stakeholders.
For more information visit
aon.com/responsibleinvestment or contact me at
timothy.manuel@
aon.com.
1) The Global Impacting Investment Network (GIIN). (2019, June). 2019 Annual Impact Investor Survey. New York, USA: The Global Impacting Investment Network
2) Jones, M. (2019). Global Perspectives on Responsible Investing 2019. London: Aon. 3) Sustainable Development Goals (2015). About the Sustainable Development Goals. [online] Available at:
https://www.un.org/ sustainabledevelopment/sustainable-development-goals/ [Accessed on Friday 27 September 2019]
4) University of Cambridge Institute for Sustainability Leadership (CISL). (2019, January). In search of impact: Measuring the full value of capital. Update: The Investment Impact Framework. Cambridge, UK: Cambridge Institute for Sustainability Leadership. 5) Jones, M. (2019). Global Perspectives on Responsible Investing 2019. London: Aon.
November 2019 portfolio institutional roundtable: Responsible investing 23
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