Based on a unique and pioneering theory of impact, UNEP FI has a close to ten-year track record of working with its members and peer sustainability initiatives to mainstream impact analysis and management in business and finance, as the cornerstone to closing the $2.5 trillion SDG funding gap..
Financing the SDGs: a new approach is needed
UNEP FI’s work on impact started in the wake of Rio+20 and the emergence of the SDGs, anchored in the idea that the SDG financing gap is first and foremost a business model gap. For most current business models, positive and negative impacts to people, planet and the economy are externalities and are therefore considered as a cost centre. By holistically integrating impacts into business analysis and management, the as-yet unexplored potential for positive impacts to reduce costs and generate revenues can be unlocked.
UNEP FI outlined this in Rethinking Impact to Finance the SDGs and work was initiated with a pioneering group of member financial institutions following the release of the Positive Impact Manifesto (2015).
The ensuing UNEP FI Holistic Impact approach started to take shape in the form of the Principles for Positive Impact Finance (2017) which provided the definition for positive impact business and finance, followed by the issuance of the Impact Radar (a repertoire of sustainability topics illustrating and enabling the holistic approach), and a set of Model Frameworks, to guide holistic impact analysis at the individual transaction level.
Providing a framework and tools for holistic impact analysis and management
UNEP FI’s work on impact took an important step forward with the development of the Principles for Responsible Banking (PRB), in which SDG alignment and impact management were directly embedded.
To operationalize this, and to support the large community of member banks who have committed to managing the impacts of their portfolios as part of their PRB commitments, UNEP FI developed the Impact Protocol for Banks, supported by an increasingly comprehensive suite of resources, including the Portfolio Impact Analysis Tool for Banks and a series of Impact Mappings that facilitate a common and transparent understanding of different sectors’ sustainability profile, of countries’ sustainability needs, and of how different sustainability topics interrelate.
In parallel, a rich body of complementary, topic-specific guidance and indicators has been developed by UNEP FI’ thematic teams and working groups.
Mainstreaming Impact Management
Since 2017 UNEP FI has been at the forefront of defining, promoting and enabling impact management. The framework and resources it has developed have started to gain widespread adoption within and beyond the finance sector.
In the meantime, sustainability and impact management have gained prominence in policy, standards and regulation
Today, through its dedicated Impact Centre, UNEP FI not only pursues its work help financial institutions identify, understand and manage the positive and negative impacts of their business activities in an integrated way. It also actively promotes the interoperability of its frameworks and resources with leading sustainability policies and standards such as the European Corporate Sustainability Reporting Directive (CSRD). It also promotes interoperability and coordination more broadly among sustainability frameworks and standards via the Impact Management Platform.