ABOUT THE PI INITIATIVE
Why the Positive Impact Initiative?
Achieving the Sustainable Development Goals requires large scale business and infrastructure solutions, which in turn require financing from mainstream commercial and fiduciary institutions. UNEP FI, a partnership between United Nations Environment and the global financial sector with members across the globe, is perfectly positioned to support financial institutions on the path to financing the SDGs.
The Positive Impact Initiative (PI) works with banks, investors, corporates and the public sector to foster a new set of private-sector, impact-based solutions to the SDGs.
- On the finance side, we’re helping institutions understand the strategic importance of the SDGs and prepare for an impact-based approach to doing business – one where impacts become strategic drivers of business models.
- On the demand side, we think about how public actors, who by and large remain in primary charge of delivering SDG-related outcomes such as housing, mobility, education or healthcare, can mobilize solutions to the SDGs at a better cost to impact ratio by issuing impact-based requests for proposals.
Learn how business, finance and the public sector can significantly step up their contributions to the SDGs by reading Rethinking Impact to Finance the SDGs
What does the Positive Impact Initiative do?
- A meta framework, the Principles for Positive Impact Finance.
- A set of simple, rigorous and credible tools: the PI Radar and Model Frameworks.
- Working Groups: a platform for collaborative work and learning among peers and with stakeholders to learn about and develop relevant processes, standards and methodologies. Current Working Groups cover impact frameworks for corporate finance & investments with unspecified use of proceeds, and identifying significant impacts in bank portfolios, in partnership with the Principles for Responsible Banking.
- Rethinking Impact to Finance the SDGs: a position paper and call to action, published in November 2018. The paper argues that a new approach to impact-based business models, where impacts are drivers of sustainable business growth and long-term value, can make it cheaper to deliver sustainability outcomes, and make it more attractive to business, banks and investors.
How is the Positive Impact Initiative positioned in relation to other initiatives at the intersection of finance and impact?
With the SDGs, we finally have a frame of reference that addresses all dimensions of sustainable development (economic, environmental and social). It is also a frame that can be used both by the public and private sectors. As a result, many financial actors want to explain how their work contributes to the SDGs, and look for ways to scale-up their contribution.
The Positive Impact Initiative is based on the idea that addressing the scale of the SDG financing gap requires new approaches by mainstream business and finance (Please refer to Rethinking Impact to Finance the SDGs for more on this thinking.)
The focus of our work and attention is with mainstream finance, UNEP FI’s core constituency.
With this in mind, we collaborate with other initiatives at every opportunity. Close to us, we have built a UN Alliance for SDG Finance to collaborate with the PRI and UN Global Compact. We are building a joint work program with the UN Global Compact to strengthen definitions and frameworks to for financial products and activities under the SDGs, and as a lab for the development and testing of new solutions. We are also a member of the Impact Management Project (IMP) Structured Network. IMP brings together these organizations alongside GIIN, GRI, the Global Steering Group for Impact Investment, IFC, OECD, PRI, SASB, the Social Value International, UNDP, UN Global Compact, and the World Benchmarking Alliance to build global consensus on how to measure, report, compare and improve impact performance.
POSITIVE IMPACT FINANCE
What’s the difference between Positive Impact finance and impact investing?
In short, impact investments may fall under the Positive Impact finance umbrella, but PI finance is not limited to impact investing. PI finance is simply any financing or investment that “serves to deliver a positive contribution to one or more of the three pillars of sustainable development (economic, environmental and social), once any potential negative impacts to any of the pillars have been duly identified and mitigated”, as per the PI Principles. This broad definition purposefully enables us to engage with mainstream finance.
Why should I become interested in positive impact finance? what’s in it for me?
Impact analysis is a strategic tool to understand and navigate momentous technological, economic changes and growing social and environmental pressures. Under the circumstances, it’s becoming crucial for business and finance both to understand impact, as well as to have the tools to deliver positive impact. It is also a way to respond to increasing regulatory scrutiny and momentum, as attested by the constitution of the Taskforce on Climate-related Financial Disclosures (TCFD), the High Level Expert Group (HLEG) on sustainable finance in Europe, among others.
For originators, an impact approach provides a unique solution to anticipate and address the demands and needs of clients, investors and other stakeholders.
For investors, using an impact approach can help build a bigger pipeline and portfolio of investments that align with their expectations and/or those of their stakeholders.
THE PI PRINCIPLES
What are the Principles for Positive Impact Finance and how do I apply them?
The Principles are a meta framework to help banks and investors adopt a positive impact approach, so they can step up their positive impact on the economy, society and the environment, and actively participate in bridging the financing gap for sustainable development.
The Principles help financial institutions and their partners improve their processes and products, in order to deliver more impact across asset classes and financing instruments.
Supporting the Principles are several tools for impact analysis and management: The PI Impact Radar translates the SDGs into meaningful terms for business and finance. PI Model Frameworks provide guidance to apply holistic impact analysis across different financing products and asset classes, as an application of PI’s Principles for Positive Impact Finance.
What are the reporting requirements for the Positive Impact Principles?
The Principles focus on products and services. Principle 3 specifically establishes the requirement for transparency. By endorsing the Principles, banks and investors commit to working towards impact-based analyses and to issue positive impact products. Accordingly, they are expected to communicate on the credentials of their specific PI products. At the time of issue, this includes methodologies (processes, decisions, criteria, assumptions) as well as expected impacts. Over time they should report on actual outcomes linked to their products. This can be done through regular channels such as investor documentation (e.g. for bonds), websites and sustainability reports.
How do the Positive Impact Principles relate to the UN Guiding Principles on Business and Human Rights (UN GPs)?
The Principles do not explicitly refer to human rights, but like human rights, they are positioned at the impact level. They also recognize the universality and the indivisibility of the 17 Sustainable Development Goals – this universality and indivisibility is likewise a core characteristic of human rights. The Principles clearly spell out that, to be considered ‘Positive Impact’, a financed activity and/or business must contribute positively to one or more of the three pillars of sustainable development (environmental, social and economic) while ensuring that negative impacts are identified and addressed across all three. This suggests that only financing activities for which due diligence – across the three pillars – has been conducted and acted upon could qualify as Positive Impact. Therefore, the application of human rights due diligence in conducting the negative impact assessment, building on the existing industry guidance for UN Guiding Principles implementation, is not only in line with, but also a determining factor for the quality and credibility of PI products and services.