Sustainable success: Impact investing’s rising potential in 2023

Sustainable success: Impact investing's rising potential in 2023

Position Green’s US team recently participated in PEI’s inaugural Impact Investor Summit North America. The conference provided a platform for deep discussions on the current state and future of impact investing in 2023, exploring the challenges and opportunities in financing, along with the changing disclosure and regulatory frameworks.

A key highlight from the event was the emphasis on the performance of impact investing-themed portfolios. Contrary to some beliefs, impact and returns are not mutually exclusive. Portfolios with an impact focus are not only generating meaningful returns but are also outperforming traditional investment portfolios. This reinforces the idea that impact investing can be both profitable and responsible.

The implementation of the Sustainable Finance Disclosure Regulation (SFDR), particularly Article 9, has significantly improved transparency and consistency in the investment sector. These regulations have enabled investors to better understand the risks and opportunities, guiding their capital allocation decisions more effectively. The SFDR, with its focus on promoting sustainable innovation, contrasts with the SEC’s approach, which is more investor protection-oriented.

The European Commission’s response to the feedback on SFDR involves efforts to simplify disclosure requirements, provide more flexibility, and delay the implementation of these requirements. Meanwhile, the UK is developing its own Sustainable Disclosure Requirements (SDR) to combat greenwashing, with the final rules expected by the end of 2023. In the US, California is leading with new laws like the Climate Corporate Data Accountability Act (Senate Bill 253) and Senate Bill 261, which align with the Taskforce for Climate-Related Financial Disclosures (TCFD) guidelines.

A prominent theme at the conference was the need for global alignment in financial disclosure directives. This is crucial to ensure that regulations across different countries are not drastically divergent. The evolving field of sustainability reporting is anticipated to undergo significant changes in 2024, with a focus on creating more impact through consolidated and applied reporting standards.

The conference concluded with a reflection on the importance of sustainability reporting. It’s increasingly recognized that detailed sustainability reporting is not just about compliance but is key to guiding impactful investment decisions. As we look towards 2024, there’s a growing emphasis on building better business practices through enhanced sustainability insights.

Position Green is at the forefront of this evolution with its full-cycle reporting solution. Their services are designed to help organizations navigate these regulatory changes, ensuring compliance and empowering them with actionable insights to drive their sustainability agendas.

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