How can investors be encouraged to consider more than purely commercial and short-term gains?
Various sets of investment principles have emerged in recent years. These principles aim to incorporate social, environmental and governance criteria into investment decisions in order to enhance the benefits and reduce the damaging effects of investment for development. Increasing numbers of organisations are signing up to these principles for reasons that range from improving their reputation to minimising risks and improving long-term investment prospects. Yet their impact on sustainable development remains unproven.
Shaping Sustainable Markets’ new report takes a first step in assessing the content, take-up, implementation and impact of investment principles. The report focuses on four sets of investment principles – the UN Principles for Responsible Investment (PRI), the Equator Principles, the Environmental and Social Principles of the European Investment Bank (EIB), and the OECD Declaration on International Investment and Multinational Enterprises.
Amongst other findings, the study shows that investment principles serve to mitigate the worst effects of investments, rather than incentivising a shift in the underlying basis of decision-making. The authors call for better monitoring and measurement of the impact of investment principles, and improved understanding of the institutional changes needed to achieve investment that supports, rather than undermines, sustainable development.
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