Using accounting standards as a model
The Sustainability Accounting Standards Board was modeled on the Financial Accounting Standards Board with the goal of doing for sustainable investing what FASB has done for accounting.
Last fall, after seven years of work, the organization released its framework for analyzing 77 industries along a consistent range of environmental, social and governance metrics.
The group’s overarching goal is to focus on sustainability’s financial impact on a company and what that means to investors.
General financial information for most companies is available online, but the same cannot be said for a company’s approach to using environmental, social and governance measurements, said Bryan Esterly, the sustainability board’s director of standards research. Even companies that provide their own sustainability reports do not do so in a standardized way as they do with accounting measures.
“What we produce are standards,” Mr. Esterly said. “We don’t produce ratings. Our view is, the ratings could be more accurate and robust if there was a market standard out there.”
One drawback: So far, only about 60 companies have used the board’s standards.
Swapping numbers for a heat map
Erika Karp, the chief executive of Cornerstone Capital, which manages money for wealthy people, came to impact investing through equity research at top global investment banks. She said she saw environmental, social and governance analysis as a critical investment discipline, akin to quantitative or fundamental research.
But assessing an investment’s impact has been difficult to do in a way that is meaningful and understandable to the high-net-worth clients she serves. Using the United Nations’ 17 sustainable development goals, Cornerstone created the Access Impact Framework to apply those goals to companies in different sectors.
Article source: https://www.nytimes.com/2019/05/03/your-money/impact-investing-standards.html?emc=rss&partner=rss
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