Investor impact

Despite the multiplication of green marketing claims on the topic, research suggests that genuine ‘impact management’ does not yet exist for financial products commonly sold to end-users (such as equity and fixed income funds, life insurance products, etc.). 

The key technical barriers relate to 'additionality': 

• Most economic players (e.g. large companies) financed through retail investment products, enjoy access to financial markets and/or bank lending. Access to finance is therefore not the factor that limits their growth, especially in a low-interest rate environment. As a consequence, investing more or less in the stocks and bonds of those players is not meaningful pathway to create a material difference in the real economy.
• Investments in early-stage green ventures and projects. Such options are available on crowdfunding platforms or other vehicles. But these options are usually not offered by financial advisors, who do not necessarily have the knowledge to recommend them and the tools and accreditations to facilitate investments. 
•  Using their shareholder voting power associated with share ownership to support climate and environmental resolutions could also emerge in the future as a potentially impactful technique. However, it requires either direct ownership from households (which is very limited), or the financial intermediaries to consult end-users on the voting policies and decisions (which does not happen today). 

The same obstacles exist for institutional investors that commit to align their investment strategy with climate goals: although scenario analysis enables to measure the alignment of asset allocation with climate goals, there is no methodological framework today to measure the impact of investment choices in the real economy.