A network of major international financial institutions (FIs), capital markets participants and industry stakeholders have formed the Impact Disclosure Taskforce to establish voluntary guidance designed to help corporate entities and sovereigns measure, as well as disclose their efforts to reduce major gaps to achieving the United Nations Social Development Goals (SDGs).
The taskforce includes Amundi, AXA Investment Managers, Bank of America, Blaylock Van, BlueMark, BlueOrchard, Caisse de dépôt et placement du Québec, Citi, Deutsche Bank, Goldman Sachs Asset Management, J.P. Morgan Corporate & Investment Bank, Morningstar Sustainalytics, Natixis Corporate & Investment Banking, Natixis Investment Managers, Pictet Asset Management and Standard Chartered.
It also obtains input from public development banks including the Asian Development Bank, the French Agency for Development, and the United States International Development Finance Corporation, the Global Impact Investing Network and members of the Global Investors for Sustainable Development Alliance.
The taskforce is acutely aware, it says, that the world is not on track to achieve the SDGs, the global agenda agreed in 2015 to alleviate poverty and inequality, provide for basic needs, protect the planet and combat climate change by 2030.
Achieving the SDGs requires unprecedented levels of investment, particularly in emerging markets and developing economies, estimated by the UN Conference on Trade and Development to be over US$4 trillion per annum.
The volume of private investment seeking financial, environmental and social returns is estimated, according to Bloomberg, to grow from US$41 trillion in 2022 to US$50 trillion by 2025. However, corporate entities and sovereigns in jurisdictions with the most significant development gaps often lack the disclosures necessary to access such sustainable pools of capital.
The taskforce has set out voluntary guidance that draws on existing resources to help entities set targets that specify their intentions for incremental contributions towards addressing the development challenges that are most relevant to their local context. The guidance will also help them monitor and report their progress against such targets.
As well, the taskforce, it notes, intends to explore mechanisms for disseminating and analyzing this entity-level impact information to promote transparency and accountability. Entities that apply the guidance would provide helpful data required for investment decisions, thus making their entire balance sheet more attractive to sustainable financiers.
While the guidance can be used by corporate entities and sovereigns of all jurisdictions, it is primarily designed for entities that operate in economies facing the largest SDG gaps and in jurisdictions without regulatory guidance for sustainability disclosures.
“Mobilizing private investment toward impact-driven solutions has never been so dramatically needed to accelerate sustainable development in emerging markets and developing economies,” points out Caroline Le Meaux, global head of ESG research, engagement and voting at Amundi.
Arsalan Mahtafar, co-chair of the taskforce and head of J.P. Morgan’s development finance institution, adds: “Institutional investors with strategies to finance the SDGs face a dearth of investible assets in the developing world. A transparency mechanism on an entity’s anticipated and realized SDG impacts has the potential to unlock hundreds of billions of sustainable capital towards international development each year through mainstream financing channels.”