According to the United Nations, USD 5-7 trillion are needed each year through 2030 to meet the Sustainable Development Goals (SDGs) worldwide. This financing is needed in mature and emerging economies alike, touches on all aspects of the built environment and is expected to come substantially from private sources. There is no shortage of ways the property sector can contribute to meeting the SDGs, from investments that reduce carbon emissions (such as energy efficiency and low carbon energy), improve health and wellness (such as healthy buildings, walkable cities and healthcare facilities), make efficient use of resources (such as low-impact materials and water efficiency and reuse), improve skills (such as workforce training) and more.
An impact-based approach implies that, while some economic sectors have greater potential for positive impacts, no activity is exempt from potential negative impacts. Identifying where investors have positive and negative impact influence can help investors clarify the financial, social and environmental impact they seek to create and the negative impact they need to mitigate. It can compel institutions to move from a position of responding to passive catalysts (operating in markets with long-range sustainability policy goals or incentives, for example) to discerning the social, socio-economic and/or environmental needs and gains available and seeking and executing investments in pursuit of them. Impact intentionality, thus, becomes part of strategic value-driver for businesses.
Practical guidance for property investors
Positive Impact seeks to provide a new perspective on how individual institutions and, collectively, the whole of the finance sector creates sustainability benefits. UNEP FI sees this as part of an ‘adoption curve’ for more rigorous assessing, screening and valuing, and measuring investment impact opportunities and outcomes. Moving up the impact-based approach adoption curve is both a change in mindset from investors and a process of developing skills and capacity. The process, as shown in the graphic, is presently in its early stages.
To support investors as they move up the adoption curve, UNEP FI is developing an action-oriented framework, i.e. steps to be taken by practitioners and the results sought at each stage of the property investment cycle. The framework is structured around a set of investment objectives, presented as guiding questions that can inform decision-making during key stages. They move from investment thesis (clarity of impact) through investment outputs (market and sustainable returns; measurement of impact) to hoped-for outcomes (additional finance; impact flows). These objectives complement existing ESG integration processes but go further in their reach.