It also provides the necessary encouragement and support for them to deepen and broaden their measurement and disclosure of non-financial KPIs, which are relevant to the investor.
To further the effectiveness of impact investment and create broader top-down change, engagement should go beyond these bilateral relationships and include collaboration with industry peers, governmental organisations, academics and specialists.
Impact measurement is key
All impact investors have their own approach.
However, what is important for the success of impact investing (success defined here as the development of a sizeable proportion of global investments which have, at their core, the goal to generate a financial return by improving societal imbalances and nurturing the environment) is that high standards are maintained and that it is clear what is meant by “impact”.
Measurement is key. With no standardised reporting, it is critical the investment managers provide (and asset owners request) clear measurement of each investment made, however imperfect the data may be – the commitment must be there in order for the disclosure to improve.
If impact investing is to truly be considered successful, it must address the big question that came out of the financial crisis – does finance work for society or against it?
To give a positive answer, impact investment must serve the broader public.
It must be accessible, transparent and relevant in order to engage the investing public.
Hope for our planet and the people on it comes from unleashing the power of ordinary investors, giving them the tools to allocate their investments in a way which matches their ethics – only then will we truly be able to call impact investing a success.
Victoria Leggett is head of impact investing & portfolio manager at Union Bancaire Privée