Sir Ronald Cohen on Impact Investing
What does impact investing mean to you?
To me, impact investing means optimising for impact, risk, and return – making an intentional positive social or environmental impact and earning a financial return with your investment.
How can we generate growth and a positive impact on the planet at the same time?
Changing values - of consumers, talent, and investors - make it easier to deliver superior growth and profits today if you deliver impact at the same time as profits.
With all the challenges facing the world and society right now, what can we do to scale up impact investing?
Impact measurement is the way. Impact accounting will be with us within the next 3 to 5 years, revealing, in monetary terms, the impacts companies create alongside their revenues and profits. With impact measurement also comes the ability to innovate through pay-for-success funding, such as sustainability-linked bonds and loans which are now a $1.5 TN market.
"With impact measurement also comes the ability to innovate through pay-for-success funding"
Why did GSG choose to sign a partnership specifically with BNP Paribas?
BNP Paribas has been GSG’s partner for many years in developing the social impact bond market (in French, contrat à impact social / CIS). It is now a major force in sustainability-linked bonds and loans. It is embracing the optimization of risk, return, impact.
What are your perceptions regarding the evolution of impact investing? Will it become a deep-rooted trend for the next coming decades, or will we have increased impact washing?
Companies will publish unstandardized and unverified data until their disclosures are regulated and harmonized. Existing data, however unreliable, is already affecting the valuation of companies in many sectors, favoring those that have superior environmental performance and punishing those damaging the planet. Within three to five years, I expect regulators will have to step in through the mandatory publication of Impact Statements. These will show companies’ revenues, costs, and impacts - all in monetary terms. This won’t be just a trend. It will become standard accounting practice.
Impact investing at BNP Paribas
In addition to the Group’s partnership with the GSG, BNP Paribas develops investment products that have a positive impact in several ways through the Positive Impact Business Accelerator. Created in 2021, the Positive Impact Business Accelerator structures and manages impact bonds, develops proprietary impact investing, coordinates the support strategy for impact entrepreneurs and deploys the MESIS impact measurement methodology, which helps BNP Paribas to assess the social and/or environmental impacts of its impact-driven clients.