The world of sustainable investing is going to have a noisy Fall season, heavy with high profile events designed to educate and galvanize. The challenge: despite best efforts, there is still a splintered view of just what everyone’s educating and galvanizing around. If there’s a map room that shines a light on what impact really means, now would be a good time to excavate it.
The industry fragmentation is understandable, given the disparate origins of participating factions. Consider that we have:
- the pioneering guard of Socially Responsible Investing practitioners, originally born on waves of divestment and sacrifice;
- emerging ESG advocates, viewing environmental, social, and governance metrics as a valid and powerful lens through which to view investment risk;
- private equity and direct impact investors, with an opportunity to prove their intentions and define their strategic direction;
- retail funds, led by investor demand, backed by the power of tremendous assets, and sometimes unsure of which room they’re in.
This is of course a partial list, and there are leaders and exceptional initiatives across all categories. But with this many perspectives and business models in play, it stands to reason that presenting a united front – or even a united language – would be a persistent hurdle. Indeed, it’s been less than a year since Bloomberg conceded that “a fifth of investors don’t incorporate ESG guidelines into their mandates. The main reason: they can’t define them.”
The good news is that we seem to have progressed from a focus on proving that sustainable investing is viable to truly pursuing a shared understanding of how to scale it.
Consensus is the foundation of scalability, and the events this Fall are competing – and sometimes collaborating – to lay that groundwork. To rattle off a few, the 2018 Sustainable Investing Conference at the UN will explore practical efforts to tie ESG to the UN’s Sustainable Development Goals; PRI in Person comes on the heels of the promise to delist signatories that are not upholding the Principles for Responsible Investment (that event is also running in collaboration with the Global Climate Action Summit); the SRI Conference is tackling the broad cross-sections of ESG, impact, and advocacy.
[Note that this is just a sampling…ImpactAlpha has a nice brief on other national efforts in play to define the scope, standard, and lexicon of impact investing.]
At last year’s SRI Conference in San Diego, some of the main takeaways were the rise of the word “impact” as a potential umbrella term and the emergence of ESG as a reliable tool. 2018 has brought momentum on both of those fronts. Throughout the Fall season, we’re fascinated to see if there is greater consistency of message across factions and whether mainstream investors are ready to put ESG into regular practice.
In the meantime, we’ll enjoy the idea of illumination in the map room:
