IMP+ACT Alliance Unveils Groundbreaking IMP+ACT Classification System (ICS)
The IMP+ACT Alliance has officially launched the IMP+ACT Classification System (ICS), a significant advancement aimed at enabling asset managers to self-report their classification, measurement, and management of Environmental, Social, and Governance (ESG) impact. This initiative is designed to support financial risk mitigation strategies while advancing global objectives like the United Nations’ Sustainable Development Goals (SDGs).
During the launch event hosted by the City of London Corporation in collaboration with the UK Impact Investing Institute, practitioners received an exclusive introduction to the innovative digital platform. Developed through consultations with over 150 organizations, the platform aims to provide consistent information on impact types across diverse asset class portfolios, highlighting the benefits of a unified reporting approach.
The ICS aspires to foster collaboration and knowledge sharing among practitioners, encouraging conversations about evolving practices to enhance oversight on ESG risk and impact. Ben Constable-Maxwell, Head of Sustainable and Impact Investing at M&G Investments, emphasized this goal, underscoring the importance of dialogue to strengthen industry standards.
Catherine McGuiness, Policy Chair at the City of London Corporation, opened the online launch by discussing the necessity of promoting solutions that drive the economy toward sustainability. She noted the challenges stakeholders face when comparing the ESG credentials of investment funds, stating: “Currently, a multitude of frameworks and standards exists for assessing impact. Without a common language, the term ‘sustainable finance’ becomes ambiguous, leading to confusion and inconsistent efforts to direct capital towards impactful investments.”
To address this, IMP+ACT Alliance will introduce ‘Impact Classes,’ which will categorize investments sharing similar impact characteristics, regardless of the techniques employed by asset managers. This initiative aims to establish a global consensus on measuring, managing, and reporting impact, enhancing comparability between portfolio-level impacts as consistency improves within the industry.
Sarah Gordon, CEO of the Impact Investing Institute, echoed the need for unified action toward greater effectiveness in impact investing. She pointed out that while various actors are aligned with the core mission, increasing private sector capital directed towards social issues and achieving the UN SDGs is crucial.
Gordon elaborated on the necessity for organizations to eventually account for their impacts, both positive and negative, highlighting the launch of the Impact Classification System as a pivotal advancement in this journey. “Technology offers vital and cost-effective solutions to the challenges faced in the impact investment market,” she noted.
The City of London Corporation supports this initiative, alongside strategic partners such as Deutsche Bank, IMP, Bridges Insights, Toniic, Impact Capital Managers, and the Make My Money Matter campaign, all collaborating with IMP+ACT in its efforts.
Recently, Claudia Coppenolle, co-founder and CEO of the IMP+ACT Alliance, discussed the prevailing belief in the investment community that a specialized strategy is crucial for managing ESG impact, often driven by philanthropic intent. Nonetheless, she highlighted that many investors are recognizing the commercial value in ESG factors, which can lead to cost reductions and enhanced operational efficiencies.
As awareness of the dual impacts—both positive and negative—of investments grows, there is a stronger call for educational initiatives regarding the financial implications of ethical, social, and governance factors on investment portfolios. Coppenolle concluded, “Integrating ESG considerations into capital allocation is simply good investing. By transparently measuring and reporting these factors, organizations can effectively manage and mitigate long-term regulatory and reputational risks.”