The report's preparation started with a declaration signed by more than 450 worldwide participants of the 2020 GSG Global Conference, a conference aiming to accelerate impact investments. The Japan Impact Investment Network (J-IIN) is also a signatory to this declaration.
GSG was founded in 2015 under the G7 (then G8) leadership to expand impact investments around the world through industry-academia-government-private collaboration. Headquartered in the UK, the group disseminates strategies and policies on investors and policymakers.
The new report consists of three parts: 1) Time to Deliver, the main report; 2) Financing a better world requires impact transparency, integrity and harmonization and 3) Mobilizing Institutional Capital towards the SDGs and a Just Transition. The report mentions various specific examples and focuses on accelerating the mobilization of private-sector capital. It includes the following main points.
1) To remove barriers to private-sector capital mobilization, we can now take advantage of previously unimaginable methods, including influencing corporate behavior using changes in social awareness and creating and measuring environmental and social impact using digital technology.
2) It is vital to accelerate the transparency, integrity, and harmonization of impact information as this is key to the mobilization of private-sector capital. Based on the principle that "if you cannot measure, you cannot manage," we should aim to establish an accounting/audit/assurance system that will allow integrating impact to become mandatory in corporate accounting and improve the quality of information reported on impact.
3) To realize the SDGs/Just Transition, concrete financial mechanisms and products are needed to enable private institutional investors to mobilize funds to the emerging countries. The report pays particular attention to Blended Finance schemes. In addition, it presents various specific examples, including ways of removing barriers to entry for private institutional investors.
The task force also added that effort should be made to incorporate emerging countries' and SMEs' perspectives and actual operating conditions into the design process of the framework of impact information so that impact standards and reporting may become more pervasive.
The report reflects well the current state of impact investment. It also lays out the direction to proceed in the future, where the ultimate purpose of impact investment is to address the environmental and social issues hat are facing the entire globe. It also presents the idea of the target and distribution method, making sure that there are no people or regions left behind, and suggests important ways to collaborate. I think this report delivers a strong signal about the urgent need to look ahead and see impact within the context of global environmental and social issues. Individual companies and investors may have different impact goals in different regions, but the issues we are addressing are global. Encouraging collaboration will help channel funds more effectively to address the most critical issues.
The report's recommendations align with the current and future direction of impact and ESG investments as discussed at our J-IIN Webinar held in December 2021. I agree with the point that impact investment in emerging markets is an indispensable part of the future of impact investment and essential to reaching the goal of equitably addressing global social and environmental challenges.
J-IIN's goal of supporting mutual understanding and collaboration between business and investors is in line with this report's emphasis on the importance of reflecting the community's voice.
J-IIN looks forward to continuing to support impact entrepreneurs and investors from Japan to expand into emerging countries.