The importance of the social impact of our investments

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Even though we feel like what we are doing is just a drop in the ocean, together these drops of water make up the oceans.

The world faces many challenges: the increase in geopolitical conflicts which cause massive migrations and destabilize access to agricultural materials and energy sources, the demographic explosion in certain developing countries, the difficulties of access to education for all, inequalities, unemployment and poverty. According to the UN, 1.2 billion people (or 15% of the world’s population), live on less than a dollar a day and 4 billion (61% of the world’s population), with an income of 365 to 3,000 dollars per year1. Finally, and perhaps most urgently, climate change is causing rising sea levels and more natural disasters that will upset nature and biodiversity. These challenges will not be without consequences for the years to come, generating in particular new social tensions. Our activities have increasingly profound and global implications that impact the planet, the oceans, our climate, our cities and certainly our lives.

What to do to initiate change?

The work carried out by governments, development aid organizations and NGOs contributes in large measure to this. However, this is not enough. We must move up a gear because time is running out. Investment needs are colossal, the annual financing gap is more than USD 1.7 trillion according to OECD estimates2. The participation of the private sector in these changes is obvious: impact investing is one of the responses needed to resolve these issues to promote the emergence of a low-carbon and more socially inclusive economy. Impact investors target companies whose business models are based on sustainable technologies, affordable health, equitable education, responsible agriculture, clean consumption and energy. For example, the company Scatec Solar, listed in Norway, provides solar energy at attractive prices. Thus, it has a double positive impact on the climate and on disadvantaged populations. This company is present in many countries where part of the population is poor, such as Rwanda, Mozambique, Egypt, South Africa and Jordan. In 2021, it generated revenues of more than 470 million euros and a result of 29 million euros3. His work is recognized by the World Bank and many development banks.

How can we guarantee a real positive impact of our investments?

While it is essential to better measure the impact of our investments on global warming through CO2 or methane emissions, it is becoming necessary to measure their impact on society, nature and humans. Tools, databases and accounting standards are gradually improving. In the United States, the International Sustainability Standard Board (ISSB) and in Europe, the European Financial Reporting Advisory Group (EFRAG) contribute to improving the quality of company data. Several players are also moving the lines, such as the Global Impact Investing Network (GIIN) with its IRIS+ method, the UN with the SDG Impact Standards or the World Bank and the IFC with the principles for impact investing. , endorsed by over 150 asset managers4. Finally, regulation must progress, as the market does not always manage to self-regulate. The implementation of labels and new laws is essential, such as the new European taxonomy, the Sustainable Finance Disclosure Regulation (SFDR) adopted in 2021 and applicable to banks, or the new rules put in place by successive COPs.

Switzerland is one of the leading countries in social impact investment with a real ecosystem: European headquarters of the UN, specialized international organizations, NGOs, foundations, microfinance and impact investment players, private banks, managers wealth and institutional investors. The challenges posed by sustainable development, in particular climate change, the preservation of nature and respect for human dignity, are called upon to disrupt the way we invest, in Switzerland, Europe and the United States. Social impact investments, based on analysis incorporating long-term objectives, are a necessity in the coming decades. They are not a fad, rather an awareness of everyone’s responsibility. We are all players in this change regardless of our position in our company or organization. Even though we feel like what we are doing is just a drop in the ocean, together these drops of water make up the oceans.

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