21 December 2017 | Internet

Investment of impact and objectives of sustainable development

In the world of the sustainable investment, it is not possible not to be spoken of the Objectives of Desarrollo Sostenible (ODS), because these objectives are everywhere and make possible great projects.

The great pension funds already have established objectives elevated enough, and the patrimonial managers are developing products based on them. All this is taking the concept of the investment of impact to a new level. It is happening to be a niche to be at your service of the day, to be an unliquidated investment to offer abundant liquidity, and to concentrate in investments and projects of direct hit to adopt a global perspective of the impact that exert all the companies and countries altogether. So the moment has arrived for going deep in the basic concepts of the impact investment.

The definition of impact investment is the following one: €œInvestments realised in companies, organizations and bottoms with the aim of generating a social and environmental impact, in addition to an economic yield.€ One is made up of three elements:

  • Intentionality: the investment must try to generate a social impact and/or environmental positive.
  • Economic yield: one hopes that the investment generates a yield.
  • Mesurable impact: the impacts exerted, tried or no. must be quantified and communicate.
  • Therefore, before investing, the impact is due to define clearly that it tries to obtain the bottom, as well as its predicted yield (and its risk). From this declaration of intentions, the parameters of measurement of the impact are defined and a pursuit of the same is realised.

    The ODS offer a suitable frame

    The ODS constitute a good frame on which to determine the social and environmental impact that persecutes a project or investment. They started up in September of 2015, replacing the Objectives of Investment of the Millenium, centered in eight I put. Much in them advanced, but they continue existing numerous global problems without solving. With the launching of the ODS, the UN it specifically invited to the financial companies and organizations to contribute to the attainment of the objectives. Some of the majors patrimonial pension funds and managers have accepted the challenge. In the following graph are the 17 objectives.

    All of them are not compatible with the surroundings of the investment, nor are excellent for all the organizations. For this reason, some investors have chosen to concentrate only in a few, whereas others have preferred to group them in more general goals towards those than to orient itself. In any case, these objectives have formed an suitable frame according to which to define the impact that an investor wishes search.

    For each objective, the UN has offered direction on the impact that is due to persecute. For example, ODS 3 tries on promoting the health and the well-being, and establishes long term goals on the elimination of serious diseases, as the malaria. In more functional and daily terms, it pleads to obtain a reasonable and universal sanitary cover, as well as to reduce to half the number of deaths and injuries derived from traffic accidents to global scale.

    Here it can perfectly fit the direct participation of the companies. If we close by analyzed each of these concrete objectives, we will see that to value the impact of a company it exceeds it is less obvious than initially it could seem. For example, all the companies of sanitary services cannot automatically contribute to obtain ODS 3: a greater concentration in activities needs destined to fight certain diseases and, geographically, it is necessary to orient itself more to the developing countries.

    Not only the companies of the sector of the health can contribute to the attainment of this objective: those of transports, or those of the financial sector, for example, can also collaborate. On the other hand, the companies can also negatively contribute to that an objective is obtained, by means of polluting practices or injurious products for the health. This negative formulation is necessary, since, at the time of valuing the global contribution, the difficulty often resides in hefting the positive contributions of certain products and the contributions, sometimes negative, of some processes.

    The economic yield continues being necessary

    Most of the institutional investors require that their investments of impact offer a competitive economic yield. Nevertheless, since this land is undergoing a transition, from the traditional initiatives of impact towards a majority approach, and he is quite novel, the investors can also consider investments whose yield is uncertain. In my opinion, to invest in companies that offer solutions to global problems it seems a strategy of solid investment!

    And, considering that the objective of the impact investment is not other that the one to clearly mark a difference in the contexts social and environmental, also we must measure this type of impact in all our investments. At the moment, the habitual thing is to measure results (emissions of CO2, results of the interaction with the workers, etc.). The impact parameters talk about to results as the increase of the biodiversity, the diminution of the impact on the climate change, or the generation of economic growth. The traditional bottoms of impact have developed methods to quantify their results: in micro-credits, for example, the penetration in rural areas or the feminine population, and the creation of use is moderate.

    In the enterprise sphere, it is possible to mention an interesting example exceeds how the producer of nourishing ingredients Christian Hanssen persecutes the ODS. It makes nourishing enzymes and cultures, products of nutrition and health, and colouring natural. The company has determined that 81% of their products contribute direct and positively to the attainment of ODS 2, 3 and 12 promoting sustainable agriculture, improving the global health and reducing the nourishing residues.

    In academic Literature, we found diverse scientific marks created to value these impacts. The scientists and the financial sector must collaborate to devise practical solutions for this challenge of the quantification. Therefore, although they exist multitude of challenges and obstacles, it seems clear that the impact investment is led to stop being a niche and to become majority current. The financial sector must gather the glove and demonstrate that the impact investment really can take to the practice on a large scale and trigger changes that are truly necessary.

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