(3BL Media/Justmeans) – Investments that have a social or environmental benefit have grown substantially in the last few years. A recent report from the Washington-based Forum for Sustainable and Responsible Investment said that socially responsible investment assets in the U.S. stood at $7 trillion in 2014, registering an increase of 76 percent over 2012. A significant portion of these investments are aimed at helping developing countries.
JP Morgan and Global Impact Investing Network released a survey report in May, which said that almost 50 percent of the $60 billion in impact investments managed by respondents was invested in emerging markets. However, the global sustainable development gap is still too wide and faces many challenges. In 2014, foreign investment into developing countries dropped by 16 percent to $1.23 trillion, further widening the $2.5 trillion gap needed annually to address the most critical areas.
Anna Kearney, associate director for CSR at the Bank of New York Mellon (BNY Mellon), which recently released a white paper on the importance of social finance, said that the field is still relatively new and does not have the track record to generate investor confidence. Kearney said that more independent measurement tools such as the Global Impact Investing Rating System (GIIRS), which measures the social and environmental impact of a particular fund, are needed.
Transparency also needs to be handled in innovative ways. For instance, CDP, a UK-based organization, works with companies to disclose their GHG emissions. The number of companies that signed up with CDP has grown dramatically from 253 in 2003 to 5,003 in 2014. Accessibility is another important factor for investors. They need access to attractive impact investing products that meet their requirements.
An example is the carbon efficiency strategy launched recently by Mellon Capital, the investment boutique arm of BNY Mellon. The strategy tackles climate change by favoring companies with low carbon emissions and barring investments in coal mining and production companies.
Another relatively new area is development impact bonds that aim to help tackle complex social issues in developing countries. An example is the Global Alliance for Vaccines and Immunization, which raised more than $5 billion from private investors – and secured commitments of $6.3 billion from donor governments – in bonds for vaccines in more than 70 countries.
William Burckart, CEO of impact investing advisory firm Burckart Consulting, said that social impact investment is a fragmented and nascent industry. If the investors can speak on the same page, it has the potential to generate far greater field activity.
Source: The Guardian
Image Credit: Flickr via Sustainable Brands
This post was originally published on Justmeans.com
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