Final Impact Disclosure Guidance Released, Aimed to Scale Financing for the UN Sustainable Development Goals

Rhea-AI Summary

The Impact Disclosure Taskforce, co-chaired by J.P. Morgan and Natixis Corporate & Investment Banking, has released its final voluntary Impact Disclosure Guidance following public consultation. The guidance aims to help corporate and sovereign entities provide transparency on their efforts to reduce poverty and inequality in underserved communities.

The initiative outlines a five-step process for measuring and disclosing development impact of business strategies and national development plans. The guidance focuses on entity-level assessment while remaining context-specific, and emphasizes impact-oriented outputs and outcomes. It's designed to help attract impact-focused investors seeking both financial and social returns.

Positive

• Initiative could attract new impact-focused institutional investors to JPM
• Positions JPM as a leader in sustainable development financing

Negative

• None.

Insights

Financial Analyst

The release of the Impact Disclosure Guidance represents a significant step toward standardizing ESG reporting and impact investing metrics. While voluntary, this framework could become an industry standard, particularly given J.P. Morgan and Natixis's backing. The five-step process provides a structured approach for measuring development impact, which could enhance transparency and comparability in impact investing.

The guidance's focus on both developed and developing markets, coupled with its entity-level assessment approach, makes it particularly relevant for institutional investors seeking to align portfolios with SDG objectives. This could potentially unlock significant capital flows toward impact investments, as standardized disclosure reduces due diligence costs and improves investment decision-making efficiency.

Market-led initiative could drive more capital to investments that advance sustainable development in places with the greatest need

NEW YORK--(BUSINESS WIRE)-- The Impact Disclosure Taskforce, a market-led effort co-chaired by J.P. Morgan and Natixis Corporate & Investment Banking, released its final voluntary Impact Disclosure Guidance, following a public consultation period. The Impact Disclosure Guidance helps corporate and sovereign entities provide transparency on their efforts to reduce poverty and inequality in communities that still lack access to basic human needs. It also helps disseminate information to institutional investors that are seeking investments that offer both financial and social returns.

Drawing on existing resources, the final guidance outlines a five-step process for corporate and sovereign entities to measure and disclose the development impact of their business strategies or national development plans. The guidance, whilst voluntary, is applicable to both developed and developing country entities, as a means to measure their impact on underserved communities at home and abroad, and to attract impact-focused investors to fund their efforts. Key aspects of the guidance include:

• Entity-level but context-specific: Assesses the entity’s overall strategy in countries of focus, measuring how the entity’s products, services, and operations are anticipated to address the most acute development gaps in each country;

• Impact-oriented: Focuses on outputs and outcomes, including plans to achieve outputs and the theory of change assumed to lead to outcomes; and

• Forward-looking: Establishes targets that measure intended impacts, as well as a commitment to monitoring and reporting progress against targets.

With the release of the final guidance, the Impact Disclosure Taskforce encourages:

• Investment banks and underwriters to highlight and promote the adoption of the guidance to their corporate and sovereign clients;

• Institutional investors to review entities adopting the guidance for allocation from their sustainable or impact portfolios;

• Data and analytics providers to support investors with independent verification and analysis of the development impact disclosures; and

• Regulators to consider interoperability of the guidance with sustainable finance rules and disclosure regulations.

First convened in April 2023, the Impact Disclosure Taskforce is a network of more than 80 financial institutions and industry stakeholders whose objective is to bring more impact transparency to financial markets. While continuing to expand its network, the Taskforce remains a resource to stakeholders looking to implement the voluntary Impact Disclosure Guidance. Additionally, the group is now working on building market infrastructure to help disseminate and analyze disclosed impact information.

Gergana Thiel, Global Co-Head of Macro Sales, J.P. Morgan:

“Institutional investors that prioritize impact in their investment strategies are more varied and nuanced than traditional ESG investors. While some investors may seek impact on financial inclusion, others on water and sanitation, and others on gender equality; they all require better impact disclosure from entities issuing securities. This guidance will increase the investment opportunities across all themes, providing investors more choice to invest in accordance with their financial and non-financial criteria.”

John Ploeg and Armelle de Vienne, Co-Heads of ESG Research for PGIM Fixed Income:

“Historically, ESG disclosures have focused on financially-material ESG risks/opportunities; however, with some asset owners increasingly looking to generate positive environmental and social impacts with their investments, the need for issuers to take a standardized approach to reporting impacts is paramount for asset managers to determine appropriateness for these clients. This guidance strikes a great balance between standardization and giving issuers the flexibility to report on what’s most material for them.”

Dan Grandage, Chief Sustainability Officer, Investments, Abrdn:

“This guidance addresses a neglected global engagement issue and provides a practical framework for companies to report on positive impact. Making this data accessible, consistent, and comparable has aided impact analysis and reporting in emerging market debt, notoriously an asset class where data access has been substandard or difficult to access. We hope it will help support the growth of investments dedicated to contributing to the UN SDGs, an objective abrdn is committed to via our SDG aligned fund range.”

Cédric Merle Hamon and Leisa Cardoso De Souza, Center of Expertise and Innovation within Natixis Corporate & Investment Banking’s Green and Sustainable Hub:

“The guidance is a new toolbox for framing a contribution to the UN SDGs in a readable way for financiers. It provides a step-by-step method and will nudge corporates and sovereign entities to set forward looking targets. It also paves the way for fruitful engagement on impact delivery and optimization, but also remediation as it includes negative effects.”

For more information, visit https://www.icmagroup.org/assets/documents/Sustainable-finance/Impact-Disclosure-Guidance-October-2024-181024.pdf.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241023147754/en/

Media Contacts:

Charlotte Powell, J.P. Morgan, charlotte.f.powell@jpmorgan.com

Ashley Frost, J.P. Morgan, ashley.c.frost@jpmorgan.com

Source: JPMorgan Chase & Co.

FAQ

What is the Impact Disclosure Guidance released by JPM and Natixis?

The Impact Disclosure Guidance is a voluntary framework that helps organizations measure and disclose their development impact on underserved communities, focusing on reducing poverty and inequality while attracting impact-focused investors.

How does JPM's Impact Disclosure Guidance work?

The guidance provides a five-step process for corporate and sovereign entities to measure and disclose the development impact of their business strategies or national development plans, focusing on outputs and outcomes in specific country contexts.

What are the key aspects of JPM's Impact Disclosure Guidance?

The key aspects include entity-level but context-specific assessment, impact-oriented focus on outputs and outcomes, and applicability to both developed and developing country entities.