NordSIP (Copenhagen) – On a dark and wet Thursday in November, NordSIP invited a group of influential Danish institutional investors to listen to four experts in impact investments. AXA’s Shade Duffy, together with Union Bancaire Privée’s Victoria Leggett, responsAbility’s Per Haagensen and Cambridge Institute for Sustainability Leadership’s Jasminka Enderle, encouraged investors to direct more capital towards the Sustainable Development Goals (SDGs). More specifically, the discussion highlighted the urgency to attract new capital to impact, rather than re-labeling existing investments to fit the SDGs or any other sustainable investing framework.
First to present, Jasminka Enderle talked about the framework she has been active in developing together with the Investment Leaders Group (ILG). While a new edition of the group’s findings will be published shortly after the beginning of next year, Enderle wasn’t able to share new conclusions just yet. Instead she focused on the purpose of the group and the shape of the expected result. One of the ILG’s key ideas is to create transparency for the investment industry in the area of impact, through measurements related to the SDGs. A summary of non-financial information should be presented along financial information on investment products’ fact sheets. The ILG proposes to report along six themes, relying on the SDGs: basic needs, decent work, wellbeing, resource security, climate stability and healthy ecosystems.
Victorial Leggett is portfolio manager within sustainable investing at UBP, one of 12 partners taking part in the ILG. In her presentation, she asked if listed equity can generate impact, and explained how UBP tackles the question. Engagement is a critical part of active ownership, she explained. Intentionality, Materiality, Additionality and Potentiality (the IMAP system), is a framework UBP uses to score investments. These points guide the stock selection process towards impact generation, taking into account future ‘potential’ in addition to current activities. One example Leggett mentioned to illustrate the system is Aquafil, a company who recycles nylon fibers. The company not only scores high along the IMAP scale, but it also represents an attractive financial investment when looking at traditional metrics.
Head of Nordics at boutique ‘development impact’ manager reponsAbility, Per Haagensen presented how his firm has selected investment areas to focus on. Finance, Agriculture and Energy are the three sectors responsAbility decided to dedicate most efforts to, given the firm’s expertise, through both private equity and private debt investments. Haagensen showed how investment outcomes have been measured, using the framework proposed earlier by Enderle.
Last but not least Shade Duffy, Head of Corporate Governance at AXA Investment Managers, put the discussion into perspective. The investment paradigm is shifting, she showed. After a first wave of SRI “Best-in-class”, the industry moved into a second wave of ESG “integration in financial analysis” to finally enter today’s third wave of “positive impact”. For Duffy, IMPACT stands for Intentional, Measurable, Positive, Access, Commitment, Tangible. Indeed, she insists, intentionality is crucial when talking about impact. The industry is at risk currently, of generating a credibility gap. We need to direct more capital towards addressing societal needs. Merely re-labeling existing products will not achieve this.
We will report in detail all four presentations and the ensuing interactive discussion between guests and experts in a special report, which will be published in a few weeks. Don’t hesitate to let us know if you are interested in receiving the report, or just keep an eye on “the week in green”.
Photographic credits: Julie Margaritha © NordSIP
From left to right: Henrik af Donner, Shade Duffy, Balder Vestad, Per Haagensen, Jasminka Enderle, Aline Reichenberg Gustafsson, Henrik Hoffmann-Fischer, Kim Hansson, Victoria Leggett