In our previous publications in 2016 and 2018 described Impactalytics that investment managers slowly recognize the need to react to climate change concerning social and economic inequality to perpetuate investment results in the long run.
Since these publications, a lot has changed. The pandemic outbreak and the growing discussions concerning racial inequality across nations increased the focus to related sustainable impact subjects.
There is also more sincere involvement of corporates in these inequality discussions. For example, the corporation Nike announced a $40 million commitment over the next four years to support the Black community in the U.S. This commitment will be focused on investing in and supporting organizations that put social justice, education and addressing racial inequality in America at the center of their work (source). Impactalytics related this commitment to the key-objective 10.2 that focuses on empowering and promoting the social, economic, and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion, or economic or another status.
Nowadays, corporates also communicate sustainable impact metrics concerning their operations that are less related to the actual footprint these corporates have. Impactalytics increasingly notices that corporates show improved metrics, but real improvements can not be validated or materialized. Besides Impactalytics is not the only participant within the impact domain that observed this situation. This given the fact that with some general online searches you can already find the term 'greenwashing' for this situation.
Greenwashing is the practice of making statements or policies that make an investment (or investment fund) appear more severe about ESG than performed by the investments (source) following the definition from Merriam-Webster as "expressions of environmentalist concerns especially as a cover for products, policies or activities, the term has come to mean any faux or exaggerated ESG policy, or an environmental, social or governance project that has no meaningful impact except positive public relations."
On top of this genuine sustainable impact investors also noticed these trends. For example, Norway's $1.1 trillion wealth fund recently required the companies it invests in to step up their game on sustainability reporting (source). The fund "expects sustainability disclosures at least annually and said boards should, as a starting point, consider industry-specific metrics from the Sustainability Accounting Standards Board. Broader disclosures should be based on Global Reporting Initiative standards" the wealth fund added.
This doesn’t only apply to the corporates in which will be invested in by investors and asset managers but also to the investment managers that currently report concerning their investments. Some of the asset managers applied greenwashing to make people believe their portfolios are doing better on adopting sustainability, often for PR reasons. Even market participants such as Robeco recognised greenwashing within the industry and states "In Robeco’s view, if a strategy doesn’t have ESG properly integrated, it’s greenwashing" (source).
Impactalytics developed an insightful proposition which translates the portfolios’ actual holdings towards the sustainable impact of the investments based on our assessment for each individual corporate that is invested in. Impactalytics evaluates publicly available reporting and news which is translated via traceable and transparent methods into actionable insights. This method is based on the combination of deep learning and new technologies so personal bias from analysts is limited to a minimum.
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European Commission President Ursula von der Leyen used her annual state of the union address to call on China and other nations to join the EU in its ambitious plans to combat climate change and to meet Paris Agreement targets.
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