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The Actuary The magazine of the Institute & Faculty of Actuaries

Global banks launch ‘game-changing’ criteria for sustainable investments

Nearly 20 leading global banks and investors, managing approximately $240trn (£193trn) worth of assets, have launched a first-of-its-kind set of criteria for investments to foster sustainable development.

'Investment goes beyond the simple quest for accumulation of wealth' ©Shutterstock
'Investment goes beyond the simple quest for accumulation of wealth' ©Shutterstock

The Principles for Positive Impact Finance provide guidance for financiers and investors to increase their positive impact on the economy, society and the environment.

Those involved in the initiative hope to aid the UN in achieving its 17 Sustainable Development Goals (SNGs) through investment in infrastructure, clean energy, water and sanitation and agriculture.

UN Environment Programme Finance Initiative (EPFI) head, Eric User, said: “Achieving the SNGs – the global action plan to end poverty, combat climate change and protect the environment – is expected to cost $5-7trn every year through to 2030.

“The principles are a game-changer, which will help to channel the hundreds of trillions of dollars managed by banks and investors towards clean, low-carbon and inclusive projects."

The principles were developed by the Positive Impact Working Group, a group of the UNEP FI’s banking and investment members, including, Standard Bank, Hermes Investment Management and ING.

They do not prescribe a single method for achieving positive impacts, but require for transparent, holistic appraisals of the positive and negative impacts on economic development, human well-being and the environment.

"We welcome the launch of the UNEP FI’s principles because we believe that the purpose of investment goes beyond the simple quest for accumulation of wealth,” Hermes Investment Management CEO, Saker Nusseibeh, said.

“We can make sustainable development happen through targeted resource allocation and effective stewardship and advocacy, leading to truly impactful and sustainable businesses which deliver goods and services, which savers value and can afford and in a social environment they want to live in.”

These principles come after 18 asset owners and managers launched the Transition Pathway Initiative earlier this month to embed climate concerns into investment decisions.