Navigating the future: Key Insights from PEI’s Impact Investor Summit North America
Members of the Position Green US team were in attendance at PEI’s inaugural Impact Investor Summit North America. The conference featured thought-provoking panels on the state of impact investing in 2023 and the ways in which the firms are navigating the upcoming challenges and opportunities related to financing, as well as the evolving disclosure and regulatory landscape.
Here are some of the meaningful takeaways from the event:
- During a panel featuring institutional investors, it was noted that portfolios with an impact investing theme were outperforming traditional portfolios. Of course meaningful returns are prioritized, but what they are finding is that impact and returns are not mutually exclusive. Despite how it’s perceived, impact investing doesn’t necessarily mean there needs to be concessions made from a returns perspective.
- The growing use of Sustainable Finance Disclosure Regulation (SFDR), and with Article 9 being more intensive, has led to better transparency and consistency. These labels have benefited investors because it enables them to understand what they are looking at from a risk and opportunity perspective, and prioritize where they want to put their capital.
- The key difference between what the SEC has proposed versus SFDR is that the SEC’s directive is more about protecting investors, whereas SFDR seeks to promote sustainable innovation. The SEC is more agnostic to this fact, despite how recent proposals have been perceived to some audiences.
- The European Commission has received pushback on SFDR, and they are working to address those concerns by assessing ways to simplify disclosure requirements, provide more flexibility in the application of the requirements, and delaying the implementation of the requirements.
- The UK has proposed similar but not entirely aligned disclosure requirements in their Sustainable Disclosure Requirements (SDR) which is also meant to combat greenwashing. At the time of the conference, the finalized rules and guidance release date had been pushed back due to extensive feedback, and is expected to be released by the end of 2023.
- In the US, all eyes are on California as they recently passed Senate Bill 253, Climate Corporate Data Accountability Act, requiring large corporations in the state to publicly disclose their greenhouse gas emissions. What has received less attention is Senate Bill 261 which will affect a larger number of firms. This requires in scope entities to publicly disclose their climate-related financial risks and opportunities aligned with the Taskforce for Climate-Related Financial Disclosures (TCFD).
- Key theme on these financial disclosure directives between different jurisdictions is to find alignment to ensure they are not vastly different from country to country. The field is expected to evolve substantially in 2024.
What was most interesting of all, is that oftentimes it is said that with the increased focus and requirements on sustainability reporting, we are at risk of “losing the forest for the trees.” In fact, that growing consolidation and application of sustainability reporting has enabled even more impact because it empowers investors and stakeholders with the important information needed to evaluate where to deploy capital and resources. This sentiment prevailed as the conference came to a close, and as we look to 2024 for even more progress in building better business practices.
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