UNEP FI launches new holistic impact analysis tools for the finance sector

2 April 2020

2 April 2020 – UN Environment Programme Finance Initiative’s (UNEP FI) Positive Impact Initiative (PII) has launched two new tools for corporates, banks and investors to work together and step up their capacity to deliver on the Sustainable Development Goals (SDGs).

With millions of people affected in their daily lives across the globe by the COVID 19 pandemic, there has rarely been a time where the interdependence between countries, economies and communities have been brought to bear on our minds so clearly. It is perhaps easier under the current circumstances to understand why the SDGs were presented to the world as ‘interconnected and indivisible’. It is not enough to consider one topic at a time. Now, in a time of crisis, the need for a holistic and impact-driven approach to business and finance is clear for all to see.

Following the release of the Principles for Positive Impact in 2017, the Rethinking Impact thought piece and two sets of practitioner guidance (Impact Radar and Model Frameworks) in 2018, UNEP FI is now releasing two hands-on tool prototypes that will enable banks, investors and their service providers to implement this new, holistic approach to impact analysis and management.

The Corporate Impact Analysis Tool helps banks and investors gain a cross-cutting view of the impact status and possibilities of their clients and investee companies. It was developed through a Working Group of banks, investors and service providers. Following the Positive Impact Initiative’s unique approach, the Tool enables users to perform a holistic analysis of companies, based on the reality of those companies’ business activities and the needs of the countries in which they operate, whether for sourcing, production or sales.

This involves a 360-degree review of economic, environmental and social impact areas, as portrayed in the PII Impact Radar, systematically looking at both positive and negative associations; this holistic approach should enhance risk management, as well as opportunity identification. Ultimately, the Tool is intended to help financial and non-financial institutions collaborate more strategically to reduce negative impacts and increase positive impacts.

“As a co-founder of UNEP FI’s Positive Impact Initiative we highly value the unique space offered by the Initiative to share best practice and work collaboratively on building common frameworks and tools for impact analysis and management. As a founding signatory to the Principles for Responsible Banking, our bank is fully committed to identifying and managing impacts with our clients. This collective effort and the tools are essential to provide responsible and innovative financial solutions enabling companies to accelerate their transformation, design new business models, and collectively deliver the Sustainable Development Goals.’ – Diony Lebot, Deputy CEO, Societe Generale

The Portfolio Impact Analysis Tool for Banks is designed to guide banks through a top-down analysis of their portfolios using the same holistic methodology as the Corporate Impact Analysis Tool. Developed jointly with UNEP FI member banks and signatories of the Principles for Responsible Banking, this tool helps banks gain a global view of their impacts, based on the nature of what they finance, the impact needs of the countries they are active in, and their current level of performance. The analysis will allow banks to set targets vis a vis their most significant impact areas, where it matters most, in order to drive their contribution to society’s goals.

Working with clients will be key for achieving targets that make significant contributions to society. For this, the two tools can helpfully be used in tandem; the banking portfolio tool to identify priority impact areas, sectors and geographies, the corporate tool to take action on these impact areas, sectors and geographies, focusing as a matter of priority on those corporates that are systemically important from a thematic, sector and/or geographic perspective.

The Portfolio Impact Analysis Tool currently covers consumer banking, business banking, corporate banking and investment banking portfolios.

 ‘The portfolio tool redefines the boundaries of what, as banks we should be focusing on to strategically manage our positive and negative impacts” – Derya Ozet Yalgi, Head of Sustainable Finance, Garanti Bank BBVA

By applying a common and action-oriented methodology to corporates, their financiers and investors, the two complementary tools are meant to drive collaboration across the investment chain and significantly boost the private sector’s ability to act on and remain relevant in an SDG world. Collaboration, innovation and the drive for impactful business models will also be key to the recovery process from the COVID pandemic and ensuring that societies are better prepared and protected against future shocks. The bottom line is: we’re in this together.

The Impact Analysis Tools are open source and freely available, in a deliberate effort to promote transparency and continue to create a space for debate, consensus-building and harmonization.

Find out more on sdddot.com/positive-impact


NOTES FOR EDITORS

Quotes:

  • ‘An eye-opening experience. Expect the Portfolio Tool to become universal and essential for bank strategy.’ – Dimitrios Dimopoulos, Director, Sustainability Unit, Piraeus Bank
  • ‘One of the most interesting things about the tool is its ability to reveal opportunities; for instance, the holistic approach helps identify alternative financing options to overcome negative impacts.’ – Nehru Pillay, General Manager, Research and Intelligence, Land & Agricultural Development Bank of South Africa
  • ‘Understanding the bank’s impacts is no small undertaking. The tool helps do this one step at a time, in an iterative process over time.’ – Mette Kornvig, Vice President, Head of Regulations, Jyske Bank.
  • ‘The tool has provided a clear, step by step methodology to address the complex issue of understanding our bank’s impacts.’ – Cataline Cano, Bancolombia

Contacts:

About the PI Initiative

The Positive Impact Initiative (PII) is a think-and-do-tank within UNEP FI focused on closing the $2.5 trillion SDG financing gap. Based on a unique theory of impact, PII works with finance sector representatives and other stakeholder groups to mainstream impact analysis and management in business and finance as a cornerstone to financing the SDGs.

Please read: Rethinking Impact to Finance the SDGs for more background on our theory of impact, or read more about the need for a holistic approach to impact here.

About UNEP FI

United Nations Environment Programme Finance Initiative (UNEP FI) is a partnership between UNEP and the global financial sector to mobilize private sector finance for sustainable development. UNEP FI works with more than 300 members – banks, insurers, and investors – and over 100 supporting institutions – to help create a financial sector that serves people and planet while delivering positive impacts. We aim to inspire, inform and enable financial institutions to improve people’s quality of life without compromising that of future generations. By leveraging the UN’s role, UNEP FI accelerates sustainable finance.

 

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