This report details a framework to assist investors in understanding the social and environmental impacts of their investments. The Sustainable Investment Framework comprises of six core themes that align with the United Nations Sustainable Development Goals (SDGs) and provides tools and metrics to allow for socially and environmentally responsible investment.

What is the ideal measure?

The report outlines the ideal measure to be one that captures every area of impact regarding an investment. However, with practical limitations, the report provides metrics that focus on the environment and social aspects of investment as they are the most commonly used and measurable.

Design principles

The design principles of the Sustainable Investment Framework are geared towards creating a double bottom line with positive social and environmental impacts alongside financial returns.  The six core impact themes cover economic innovation, sustainable finance, natural capital, leadership, inclusive development, and future cities.

What can be measured today?

The report found that the most practical metrics to measure investment impact focus on social and environmental outcomes.  The metrics used are land degradation trend and status for healthy ecosystems, GHG emissions in tonnes of C02 for climate stability, and population and the incidence of basic needs indices for basic needs. The framework also provides a five-colour scheme to demonstrate the impact performance of an asset or fund.

Limitations

One of the main limitations is the lack of data regarding environmental and social disclosure. The theoretical approach of the report produces metrics highlighting areas to be tracked however, the necessary datasets required to measure real-world impact are not readily available.

Recommendations

The report recommends enhancing sustainability disclosures in companies and offers a platform for investment managers to report social and environmental performance. It is advised that the industry establishes a standardised corporate reporting system for comparative analysis, and mechanisms should be put in place to upgrade the current disclosure and data distribution networks for investors to assess investment impact on an ongoing basis.

In conclusion, the University of Cambridge Institute for Sustainability Leadership’s Sustainable Investment Framework provides investors with a tool to assess the social and environmental performance of their investments. Implementation of the framework’s design principles and recommended actions could lead to a sustainable economy while generating long-term, robust, and positive returns for investors.