The COVID-19 pandemic and heightened concerns about climate change, racial injustice, and income inequality have injected fresh urgency into the need for more sustainable investing. The pandemic’s devastating effects have laid bare how health and economic crises disproportionately affect families living in poverty, no matter where they live around the globe. More recently the conflict in Ukraine has highlighted how complex the decisions around investments, as well as around divestments, in countries violating international law can be. What are the consequences for a population if massive investments flow into a country that may violate human rights? But also what will happen to a population when divestment touches access to food and essential goods? This makes the case for integrating human rights into impact investing, particularly if investors want to ensure they’re truly using their money for good.
Results-based management and a narrative of change
The idea of sustainability-focused enterprises is that they are built themselves, help build societies, and take on these challenges. They seek to advance solutions to poverty, equity, justice, and climate change – in theory – and if prioritised and well guided, in practice – they address the gap between the increasingly crucial SDGs and current investments. It is a question to ponder: why is it that ESG investments are increasing as well as the amount needed to reach the SDGs? If the former really had an impact, the latter ought to decrease. The SDGs have not changed, but the focus on ‘sustainable’ investing has. And not all sustainable investments are necessarily supported by a framework – e.g. results-based management – around a narrative of change which is necessary for any sustainable development initiative.
