Cambridge University’s Investment Leaders Group has developed a framework that allows investors to measure the impact of their investments against the Sustainable Development Goals.
The Investment Leaders Group (ILG), a global network of pension funds, insurers and asset managers convened by the Cambridge Institute for Sustainability Leadership (CISL), has created a dashboard, called the Cambridge Impact Framework, that uses existing data to help the industry assess funds against six themes derived from the 17 SDGs: resource security, healthy ecosystems, climate stability, basic needs, wellbeing and decent work.
The dashboard uses a traffic light system to categorise impact from very negative (red) to very positive (deep green).
We struggle to answer one of the most basic questions that can be asked about a fund: Is it doing harm or good?
But Dr Jake Reynolds, executive director at the Cambridge Institute for Sustainability Leadership, and lead author of the report, warned at the launch event at the Institute of Directors in London last week that the framework is only a crude approximation, compared to the ideal metrics that will need to be developed in future to measure impact.
“The reality of environmental and social disclosure is that we struggle to answer one of the most basic questions that can be asked about a fund: Is it doing harm or good?” Reynolds said. “It’s very hard to properly generate, with today’s data, the tests that you’d want to make on a fund. These would be extremely complicated, deep evaluations of a firm’s operations and its value chains.”
For example, on decent work, ideally one would want to know the total number of jobs that pay a living wage and offer safe and healthy working conditions. However the closest approximation today is data from Bloomberg on the number of workers in full-time employment. When it came to measuring resource security, the best information available to the industry at scale was total net waste. But the ideal metric would explore losses of products into the environment as well as toxicity and scarcity of materials within a circular economy. And on the healthy ecosystems theme, the closest approximation was data on fresh water use. “That’s a pale shadow of what we want to be measuring,” Reynolds said.