By Tristan Smyth.
‘Impact,’ in a business context, warrants far more controversy in public discourse than it currently receives. It lurks in the shadows of the monolithic acronyms ESG, SDG, PRI and the now-fading CSR. Conversations should focus more on impact and less on acronyms, because impact is the answer to the question “So what?” and no matter how it’s worded, that question has received little response from the investment world.
We’ve entered a much-welcomed age where businesses evaluate more than their financial bottom-line and consider secondary objectives of their broader effects, typically under the environmental, social and governance (ESG) banner, a shift from corporate social responsibility (CSR). Since 2005, the United Nations has rolled out the Principles for Responsible Investment (PRI) and Sustainable Development Goals (SDG), which provide aspirational frameworks to address challenges — some may argue crises — that we, as the human race, must fix.
However, growing allegations of greenwashing, regulatory probes into investment banks, and a general lack of headway have maligned corporate and, occasionally, philanthropic action. A 2022 report from S&P Global found that 88% of green investment funds aren’t on target to reach the Paris Agreement goals, which offer bare-minimum solutions to strengthen the global response to the threat of climate change. In July, The Economist called ESG “three letters that won’t save the planet.” Recently, Florida banned ESG considerations when making investments for the State’s pension fund. What pundits harp on can be distilled to one fundamental problem: the absence of impact.
We lack a unified language of impact and outcomes, codified in a manner that corporations and organizations must comply with — and it should not be corporations’ role to grade themselves on the impact of their work and investments. There’s little to no incentive for accuracy and honesty, and what we’ve largely seen is toothless and tokenized reporting.
Make no mistake, the crises are real and the solutions are promising, but we need real metrics for impact — and real answers to “So what?”
Tristan Smyth (they/them) is Chief Impact and Strategy Officer at Warshield, an Indigenous consulting firm dedicated to advancing the rights and interests of Indigenous communities and building mutually beneficial partnerships with industry and government. Smyth also teaches about responsible investing in the School of Public Policy & Administration, at Carleton University. Tristan Smyth is on LinkedIn.
Banner photo is courtesy of Bakhrom Tursunov.
Sunday, September 25, 2022 in For homepage, Leadership & Governance, News & Events
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