The UN Sustainable Development Goals (SDGs) have been widely adopted as a useful framework for impact investing. Really?
The UN Sustainable Development Goals (SDGs) have been widely adopted as a useful framework for talking about impact investing. Really!
Over the last few months, many institutional investors announced their ambition to contribute to the SDGs. The vocal frontrunners are raising awareness in the investor community. At FMO, we even put the SDG icons on our windows. More and more institutional investors have come to understand why investing with impact is an integral part of their fiduciary duty. I consider this a big leap forward compared to a few years ago, when impact investing was considered a niche occupied mostly by foundations and development finance institutions. But actions speak louder than words… so now is the time to move from ambition to action!
AMBITION - The need for change
All change starts with awareness. As the ADKAR® model puts it, awareness of the need for change. ‘Communications from others’ is one of the strongest factors that can build awareness of the need for change. So every CIO who gets on stage to talk about SDGs or impact investing contributes to change. So far so good.
What else builds awareness of the need for change?
- Access to information
- An event
- An observable condition
- Readily-available business information
- Catastrophic disaster
- Gradually weakening financial performance
When first seeing this list compiled by a change management consultant focused on applying scientific research in organizational practice, I realized that I have observed many if not all of these awareness builders:
Access to information, readily available for business – thanks to the Global Impact Investing Network and others there is a wealth of information available. Books, publications and presentations are easily accessible and readily available for those willing to look further than the nearest Bloomberg terminal…
Events – almost every week, I receive an invitation to attend or speak at a dedicated impact investing event somewhere in the world. And increasingly, mainstream events put ESG and impact high on their agenda, no longer as a side topic for the final panel on the last day.
During an extremely inspiring speech by Al Gore at the 3rd Impact Summit Europe earlier this year I realized even more how many of recent catastrophic disasters and political challenges relate to climate change; even the war in Syria can be traced back to the worst drought in the region in 900 years.
Catastrophic disaster – Well. What to say… You can ignore science and facts, choose a different scientist, look away from the news, but the facts are there. During an extremely inspiring speech by Al Gore at the 3rd Impact Summit Europe earlier this year I realized even more how many of recent catastrophic disasters and political challenges relate to climate change; even the war in Syria can be traced back to the worst drought in the region in 900 years.
Gradually weakening financial performance – the low interest rate environment caused many Dutch pension funds’ coverage ratios to drop below what is considered acceptable. As impact investing can bring yield and diversification benefits while reducing risk, the investment opportunity is increasingly recognized. The recent successful issue of FMO’s 3rd Sustainability bond proves both appetite and opportunity.