ESG & Sustainability — August 31, 2021

On the Way to Impact Investment: Mind the Gap between Theory and Practice

For this paper Qontigo’s Sustainable Investment Team collaborated with Clarity AI’s research team to deep dive into the theory and practice of impact investment, define the gaps and propose the reconciliation methods between the two.

  • In this paper we review some of the most prominent impact management and measurement frameworks developed by leading institutions around the world with the aim of identifying a baseline for what constitutes impact investment
  • We compare the current state of “impact-branded” investment practices by listed equity investors to the criteria identified in the baseline, in order to assess the level of misalignment in the interpretation of impact in theory versus practice
  • Further we identify the Sustainable Development Goals (SDGs) as a useful framework for assessing the impact of companies, which is confirmed by increased investor adoption
  • We conclude the paper with recommendations on how the investment community – including investors, regulators, financial service providers, and non-profit organizations – can address this issue; and
  • At the end we set the stage for further exploration of the societal value associated with the different SDGs and SDG-aligned impact from companies

Authors

Rodolphe Bocquet

Global Head of Sustainable Investment

Anna Georgieva

Associate Principal, Sustainable Investment

Saumya Mehrotra

Associate Principal, Sustainable Investment

Patricia Pina

Head of Research, Clarity AI

Renato Coelho

Researcher, Clarity AI

Carlos Lastra

Researcher, Clarity AI