Last week, GIST Impact, KPMG and Maanch organised a roundtable meeting that brought together industry experts from leading organisations and financial institutions driving the transition to an impact economy. The impact economy values environmental and social impacts alongside financial returns. The roundtable emphasised that this is not a future aspiration but a present necessity.

The closed-door discussion delivered wide-ranging and actionable insights:

The Impact Gap: From Commitment to Action

The roundtable identified a crucial “impact gap” between pledges and implementation. Bridging this gap demands aligning government policies, corporate strategies, and investor behaviour. The discussion highlighted the importance of integrating impact across all business operations, not just climate-focused initiatives. The development of standardised metrics and reporting frameworks is also crucial for measuring and comparing impact performance.

The Role of Data and Technology

Data and technology are crucial in operationalising the impact economy. Companies like GIST Impact are developing tools to measure and report on sustainability from an impact perspective, enabling informed decision-making across the natural, human, social and financial domains. And companies like Maanch are enabling the investment ecosystem to track the process, dialogue and progress and how responsible investing is enabling a fair and prosperous future.  The roundtable emphasised that we’re moving beyond disclosure for disclosure’s sake. The focus now lies in collecting data to measure risk, identify opportunities, and create value. Digital tools can help:

• Identify and Assess Risks and Opportunities: Data and technology can help investors and corporations to identify and assess the risks and opportunities associated with sustainability issues. This information can be used to inform investment decisions, risk management strategies, and product development.
• Measure and Report on Impact: Data and technology can help investors and corporations to measure and report on the impact of their activities. This information can be used to demonstrate progress towards sustainability goals, attract impact-focused investors, and build trust with stakeholders.
• Drive Innovation and Collaboration: Data and technology can facilitate innovation and collaboration in the development of sustainable solutions. By sharing data and insights, investors, corporations, and other stakeholders can work together to address environmental and social challenges.

Engagement as a Driving Force

Engagement is a critical tool for driving impact, particularly in public markets. Investors are increasingly using engagement to encourage sustainable practices and positive social and environmental outcomes. The UK Stewardship Code, for instance, has seen a significant rise in signatories, reflecting this growing emphasis on engagement.

The Need for a Common Language

The financial and sustainability sectors need to develop a common language around impact. This will facilitate communication, collaboration, and the development of standardised metrics and reporting frameworks. The roundtable highlighted the diverse interpretations of “impact,” underscoring the need for clarity and alignment. It is heartening to see, however, that various standard setters have made tangible progress to align on the meaning of impact and to articulate how it can be calculated in a standardised, science-based way.

Key Takeaways for Leading the Transition

• Integrate impact into transition plans: Companies must go beyond climate-focused plans and incorporate new, science-based perspectives on sustainability risks and opportunities.
• Develop standardised metrics: The industry needs to establish clear and consistent metrics for measuring and reporting impact.
• Enhance investor engagement: Investors should actively engage with companies to drive positive change.
• Promote education and awareness: It is essential to educate investors, corporations, and the public about the inextricable link between long-term financial performance and wider sustainability issues such as climate change, human health, and social disruption.

Conclusion

By embracing impact measurement and engagement, we can lead the transition to a more sustainable and equitable future. It’s time to move beyond rhetoric and take concrete action. The future of finance and sustainability depends on it.