ShareAction calls for adoption of new responsible investment definitions

ShareAction has revealed an updated definition of "responsible investment," aiming to improve industry standards and address deceptive claims, urging institutional investors to prioritise environmental factors in their investment decisions.

ShareAction calls for adoption of new responsible investment definitions

Questions are constantly raised as to what constitutes as green or responsible in the investor community

According to the charity, responsible investment entails a transparent approach that considers both the positive and negative effects on society and the environment, treating them as seriously as financial risks and returns.

ShareAction has committed to releasing a set of technical documents providing guidance on establishing net-zero emissions targets to assist asset managers in adopting and implementing the new definition.

ShareAction’s chief executive Catherine Howarth OBE said: “Institutional investors have extraordinary power to influence how companies behave and the impacts they have on the world we live in.

“In launching this new definition of responsible investment, we’re demanding the investment industry balance risk, return and impact to better serve the interests of its ultimate clients.”

ShareAction commissioned a recent YouGov poll, surveying 2,000 British adults on how investment decisions made by financial institutions impact society, the environment, and financial returns.

The poll revealed that 73% of respondents believed that environmental and social factors should be taken into account alongside profits.

Among them, 30% advocated for equal consideration of financial returns and environmental and social concerns, while 13% prioritised people and planet over financial returns.

Additionally, 30% expressed the desire for some focus on social and environmental issues while still prioritising returns.

Finance Strategies 

As part of its Green Finance Strategy, the Government pledged earlier this year to establish a green finance taxonomy, offering investors clear definitions for identifying environmentally sustainable economic activities.

With the objective of enhancing standards, labels, and disclosures in the green finance sector, the Government plans to initiate consultations on the taxonomy in autumn 2023.

A McKinsey report from last year highlighted that a global annual investment of $3trn to $4.5trn in physical assets is necessary to attain net-zero emissions by 2050.

The Climate Change Committee (CCC) stated earlier this year that the UK needs to mobilise up to £10bn annually for climate adaptation investment, aligning with its net-zero objectives.

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