Key Impact Points:
- The new voluntary Impact Disclosure Guidance will enhance transparency for corporate and sovereign entities, encouraging investments aligned with the UN SDGs.
- Institutional investors gain clearer insights into projects that offer both financial and social returns, facilitating impact-driven financing.
- Over 80 financial institutions and stakeholders, led by J.P. Morgan and Natixis CIB, support the initiative to scale financing for underserved communities globally.
New Guidance Targets Impact Transparency
The Impact Disclosure Taskforce, a collaborative initiative co-chaired by J.P. Morgan and Natixis Corporate & Investment Banking, has released its final voluntary Impact Disclosure Guidance. This guidance is aimed at helping corporate and sovereign entities disclose their contributions to reducing poverty and inequality, particularly in regions with the greatest development needs.
The guidance outlines a five-step process for measuring and reporting on how business strategies or national development plans contribute to the UN Sustainable Development Goals (SDGs). It is designed to attract impact-focused investors by offering greater transparency on the social outcomes of investments.
“This guidance will increase the investment opportunities across all themes, providing investors more choice to invest in accordance with their financial and non-financial criteria,” said Gergana Thiel, Global Co-Head of Macro Sales at J.P. Morgan.
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Key Features of the Guidance
The Impact Disclosure Guidance emphasizes a few critical aspects:
- Entity-level but context-specific: It evaluates the entity’s overall strategy in different countries, focusing on how its products and services address the most pressing development gaps.
- Impact-oriented: The guidance is designed around outputs and outcomes, detailing the steps to achieve these goals and the theory of change behind them.
- Forward-looking: Entities are expected to set and monitor targets, ensuring progress is made on intended impacts.
Adoption Encouraged Across Financial Markets
The Taskforce encourages investment banks, institutional investors, and data providers to promote the use of the guidance to boost sustainable investment. The guidance will help standardize impact disclosures, providing a framework for both corporate and sovereign entities in developed and developing countries to highlight their contributions to the SDGs.
“The need for issuers to take a standardized approach to reporting impacts is paramount,” said John Ploeg and Armelle de Vienne, Co-Heads of ESG Research for PGIM Fixed Income.
Scaling Impact Investments
The release of the guidance is expected to accelerate the growth of investment in emerging markets and sectors traditionally underserved by financial markets. According to Dan Grandage, Chief Sustainability Officer at Abrdn, this framework will help alleviate challenges in accessing consistent data for impact analysis, particularly in emerging market debt.
As the Taskforce expands its network, it remains focused on developing infrastructure to enhance the dissemination and analysis of disclosed impact information. Cédric Merle Hamon and Leisa Cardoso De Souza of Natixis CIB remarked that the guidance acts as “a new toolbox for framing a contribution to the UN SDGs in a readable way for financiers,” further driving engagement and impact optimization across industries.
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