ICSWG endorses Impact Investing Principles for Pensions

The Investment Consultants Sustainability Working Group (ICSWG) has endorsed the Impact Investing Principles for Pensions, published by the Impact Investing Institute in partnership with Pensions for Purpose.

The group argued that a broader adoption of these principles would provide a stronger governance framework for investors exploring impact investment, as well as increasing the volume of capital directed towards sustainable solutions and providing support to “much-needed” transformations within the global economy.

It has endorsed the principles as part of its broader effort to increase uptake of responsible investing (RI), also emphasising that its investment consultant members are dedicated to helping investors set investment objectives that align with their RI beliefs, including impact goals.

"In addition, the ICSWG has undertaken to work with asset managers to help develop credible impact products that align with investors’ impact goals," it stated.

"We will continue to work closely with the Impact Investing Institute and other like-minded organisations on furthering these objectives and delivering impact solutions for clients.”

The principles call on pension schemes to set “impactful objectives” as part of their statement of investment principles or policies, which can be explained to members and are designed to serve the scheme purpose.

Pensions schemes are then encouraged to monitor progress against these impact objectives by identifying relevant indicators and benchmarks, and to use their voice to make change.

The principles also urge schemes to identify and appoint investment consultants and managers that are aligned with their investment beliefs and objectives, and can achieve the scheme’s impact objectives through investment and stewardship activities.

Commenting on the principles, ICSWG Impact Investing Team member, Andrew Lilley, said: “Institutional interest in impact investing has increased dramatically, especially over recent years. However, we see a great diversity of approach in implementing impact frameworks as well as inconsistencies in impact reporting.

“The ICSWG supports initiatives such as the Impact Investing Principles for Pensions that aim to bring best practice guidelines and standardisation to impact investing.”

ICSWG Impact Investing team member, Mark Jeavons, also emphasised that "rapid action" is needed to tackle the climate crisis, meaning that it is "critical" that we accelerate and mainstream sustainability into every aspect of the economy.

"Impact investing supports this goal, allowing investors to manage potential ESG risks, including climate change, while delivering positive social and environmental impact alongside a financial return," he added.

The group has previously also launched its own guidance to support pension trustees in assessing their investment consultants on climate competency in an effort to help raise investment consultants’ standards.

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