Articles passés

L'INVESTI-GATEUR

Journal en ligne du CIRQC

The rise of global sustainable investment initiatives in the 21st century

Sustainable investment can be traced back to as early as the 18th century but only in the recent years has it been gaining considerable attention across the global financial landscape. This article is intended to bring to light the many UN-led sustainable finance initiatives you may not have heard of and that you and your organization could benefit from.

 

 

 

Setting the agenda for global sustainable investment

 

In the wake of the 1992 Rio Summit, the UN Environment Finance Initiative, a partnership between UN Environment and the finance sector came to light with the objective of promoting the relatively new concept of sustainable finance. Today, it has become a global network comprised of more than 200 banks, investors and insurance companies driving cutting edge sustainable finance, to global regional and national initiatives and partnerships. Since its inception, the UN Environment Finance Initiative has launched a number of projects as illustrated below.

 

Engaging regulators and finance professionals  

 

As expressed earlier, sustainability is far from new and can be assumed in existing financial regulations. This was the approach taken by Freshfields Brockhaus Derringer, an international law firm. In the Freshfields Report published by the UN Environment Finance Initiative, the concept of fiduciary duty, that is “putting a client’s interests first”, was further developed. The distinction between “what is right” pertaining to the law and “what is good”, in other words, ethics, is made such that environmental and social issues are viewed as an integral part of the fiduciary duty. After this interpretation was made, Kofi Annan, then Secretary General of the UN, invited leading institutional investors such as the CPP Investment Board to lay out the Principles for Responsible Investment (PRI). The six principles focus on Environmental, Social and corporate Governance (ESG) issues – i.e climate change and human rights -  and were adopted by over 1,700 signatories across the globe, such as asset owners, investment managers and service providers. As much as enabling regulators and finance professionals to join the sustainable finance movement makes the PRI grow in prominence, each signatory's commitment to these practices is at least equally, if not more important.

 

Equipping the private sector with the tools for impact

 

In September 2015, the UN General Assembly has established overarching and new objectives in regards to sustainable financing, namely the Sustainable Development Goals (SDGs) to be achieved by 2030. 17 goals are set toward relieving social, economical and pressures all across the globe and paving the way for a better and sustainable future. (should we provide a link) This new plan exposed an estimated $5-7 trillion a year funding gap and brought up the need for proactive contributions from the private sector. Again, the growing consensus over the necessity to put sustainability at the heart of financial activities, also exposed a lack of necessary tools to achieve these objectives and enable sustainable finance opportunities.  How should financial institutions implement sustainability at the heart of what they do? In response to this new challenge, the UN Environment Finance Initiative’s banking and investment members drafted the Positive Impact Manifesto, which laid the groundwork for the Principles for Positive Impact Finance, launched in January 2017 with the goal of guiding investors and financiers in unlocking the potential and opportunities from sustainable financing. The principles provide;

  • A holistic definition

  • A set of frameworks

  • Commitment to disclosure and transparency

  • The assessment of Positive Impact

 

Although some of these initiatives require a certain capacity (Not clear), sustainable finance is the responsibility of every participant in the economy, and will only be achieved when all financial activities – regardless of the scale – place sustainability at the heart of their decisions making process.

 

 

 

 

Please reload