Banks, investors set standards for financing sustainable development

Nearly 20 leading global banks and investors, totaling $6.6 trillion in assets, launched today January 30, 2017 the Principles for Positive Impact Finance – a first of its kind set of criteria for investments to be considered sustainable.

“The Principles are a timely initiative from the finance sector. They demonstrate the willingness of financial institutions to go beyond current practices and to contribute to foster a more sustainable development,” said French Finance Minister Michel Sapin. “They should provide strengthened foundations for a positive cooperation between public and private actors in this area.”

“Achieving the Sustainable Development Goals – the global action plan to end poverty, combat climate change and protect the environment – is expected to cost $5 to 7 trillion every year through 2030,” said Eric Usher, head of the UN Environment Finance Initiative.

“The Positive Impact 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 provide financiers and investors with a global framework applicable across their different business lines, including retail and wholesale lending, corporate and investment lending and asset management.

“With global challenges such as climate change, population growth and resource scarcity accelerating, there is an increased urgency for the finance sector both to adapt and to help bring about the necessary changes in our economic and business models. The Principles for Positive Impact Finance provide an ambitious yet practical framework by which we can take the broader angle view we need to meet the deeply complex and interconnected challenges of our time,” said Séverin Cabannes, Deputy CEO of Société Générale, a founding member of the group.

The four Positive Impact Principles provide guidance for financiers and investors to analyse, monitor and disclose the social, environmental and economic impacts of the financial products and services they deliver.

The innovation of the Principles lies in the requirement for a holistic appraisal of positive and negative impacts on economic development, human well-being and the environment.

The Principles do not prescribe a single method for achieving positive impact, but they require that appraisal processes and methodologies be transparent.

The Principles are part of a broader process under the Positive Impact Manifesto, launched in 2015 to call for a new, impact-based financing paradigm to bridge the gap in financing for sustainable development.

“We welcome the launch of UN Environment Finance Initiative’s Principles for Positive Impact Finance because we believe that the purpose of investment goes beyond the simple quest for accumulation of wealth. 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,” said Saker Nusseibeh, CEO of Hermes Investment Management.

“The Principles are the tool that is needed to enable the business and finance community to work and innovate together, and to address the challenge of the UN Sustainable Development Goals. The financial sector has already moved forward in that direction and we hope that the Principles as well as the Paris Green and Sustainable Finance Initiative we launched last year will help marking a new stage,” said Gérard Mestrallet, Chairman of Paris EUROPLACE and Chairman of the Board of ENGIE.

“In many ways this is the beginning rather than the conclusion of a process,” said Hervé Guez, Head of SRI Research at Mirova. “The Principles build on existing frameworks, such as the UN Global Compact, the Equator Principles, the Principles for Responsible Investment and the Green Bond Principles. The group will be collaborating with a wide range of stakeholders and partners to further the implementation of the Principles,” he added.