UK: The Time For Impact Is Now!

Last Updated: 15 July 2019
Article by Raju Jaddoo

Ocorian AMEA Non-Executive Director, Raju Jaddoo, explores how impact and 'Environmental-Social-Governance' investing is governing sustainability-led investments in the developing world, becoming inescapable realities for companies and funds wishing to attract investors.

Impact and ESG (Environmental – Social – Governance) investing are reshaping adviser and investor relations. They are fast becoming the business model of the future, with investors exercising a greater degree of diligence on how their investments are bringing wider benefits.

Impact investing: Aims to generate specific social or environmental effects alongside financial gain.

ESG investing: Using non-financial Environmental, Social and Governance factors to evaluate companies and countries on how far advanced they are with sustainability.

In particular, ESG is a significant growth area within the funds industry, and with increasing emphasis being placed on these indicators by investors and regulators, one that is not going to reverse.

A duty of care

When the United Nations Environment Programme commissioned Freshfields in 2005 to interpret the law with respect to investors and ESG issues, the report concluded that not only was it permissible for investment companies to integrate ESG issues into investment analysis; but it was arguably part of their fiduciary role to do so.

In 2014, the Law Commission in England & Wales confirmed that there was no bar on pension trustees and others from taking account of ESG factors when making investment decisions. It has therefore become abundantly clear that failing to consider all long-term investment value drivers, including ESG issues, is a failure of fiduciary duty.

Impact does not impair profit – it actually drives it

Since the UN PRI (Principles for Responsible Investing) were established in 2006, investment institutions from over 50 countries, holding in excess of USD 90 trillion of assets, have signed the pledge to factor social and environmental welfare into investment decisions.

As one of the advisers of a leading European pension fund recently put it: "we have zero tolerance for fund managers who are in denial of the importance of ESG factors." Furthermore, there is a growing demand on institutional investors, especially in North Western Europe, to demonstrate proof of the impact of their ESG investments.

Prominent business leaders understand that impact investing does not impair profit – it actually drives it. They have realised that social and environmental consciousness is quickly becoming an inescapable reality for businesses and that to remain competitive, they must evolve.

More than 450 investors allocated USD 1.3 trillion to impact investments worldwide in 2016, raising demand for impact investing products and services. Family offices and 'living donor' foundations have been leading the charge. For example, the Ford Foundation has allocated USD 1 billion from its endowment to impact investment; the largest commitment of its kind by a private foundation.

Large investor groups are responding to a similar shift in values among their clients and savers. This has been led by asset management firms and banks, which collectively manage USD 85 trillion of individual and smaller institutions assets. Pension funds, the second largest group of investors in the world (USD 41 trillion), are now also moving in the direction of impact investing under the pressure of pension savers.

Reconciling sustainability with the financial goals of the investor

The change in investor attitude is steering capital to a new cadre of specialist impact investment firms. From now on, the new paradigm is the triple helix of risk-return-impact. To do this does not require reducing profits in favour of impact, they can both be maximised at normal levels of risk.

Differing from ESG Investing, which focuses on reducing company and investors risks and/or assessing a company's non-financial performance, impact investing focusses on business models and the products and services these companies produce. This goes beyond ESG-related compliance and investing.

The United Nations Conference on Trade and Development (UNCTAD) identified that achieving the Sustainability Development Goals (SDGs) will take between USD5–USD7 trillion, with an investment gap of about USD2.5 trillion in developing countries. The role of the private sector is critical in attaining these goals. It can bring agility in delivery and new approaches to financing. Ultimately, impact investments can reconcile societal development objectives with that of investors' intention to include both financial return and social impact.

In a recent letter to its shareholders, the Chairman of a leading global alternative asset management firm stressed that their proactive ESG efforts seek to not only ensure that their investments align with the Firm's mission and values, but they also view ESG as a potential value driver for their portfolio companies. He added: "in effect we believe that we can both protect and enhance the value of our investments through an ongoing program of risk management and pursue impactful opportunities that meet the needs and demands of society ".

In the African region, making ESG mandatory could be a game changer for the SDGs according to the head of faculty from the Graduate School of Business in Cape Town (GSB). The proposal by the authorities in South Africa to make it compulsory for pension funds to report on how they implement ESG provisions in their approach would really set the pace for others to follow.

According to the latest African investing for impact barometer published by the Bertha Centre for Social Innovation and Entrepreneurship at the GSB, around USD 428 billion of investment assets had been allocated by July 2017 in Eastern, Western and Southern Africa, in line with strategies seeking to generate impact together with return. And this is only half of the region's total assets under management.

Funding the future

Impact investing through ESG is fast becoming a reality, especially in the developing world. It is a must for reconciling social and environmental objectives with financial return, as much as for attracting investor funds looking for sustainability.

Originally published 12 March 2019

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions