Impact Blog

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Calvert disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Calvert are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Calvert fund. References to individual companies for Engagement or Research purposes are provided for illustrative purposes only and may not be representative of the results of all of Calvert’s engagement efforts. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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      By John Streur, President and CEO, Calvert Research and Management

      Washington - A few days ago, I wrote about the first of two urgent needs for 2018 that Calvert sees as being critical to the success of Responsible Investing: Data and Transparency. Today, we'll focus on the second need in 2018 - the development of Impact Metrics.

      As we strengthen our information systems, we will be able to provide impact reporting to multiple parties. In order to achieve the changes we need to address inequality and climate risk, we need people to understand the impact of their product purchase decisions, employees to understand the impact of their day-to-day business decisions, boards to have information to properly oversee management's sustainability effort, investors be able to differentiate the quality and financial materiality of competitive companies' sustainability efforts, and regulators and the public to hold companies accountable for their impacts. The entire system needs to tie together, just like our current financial reporting system connects.

      Consumers should be able to understand that one product has a different set of social and environmental impacts than another product, as well as the difference in the price tag. And investors should be able to see that their portfolio has a specific set of environmental and social impacts relative to a benchmark, as well as at the individual company holding level. Only when we create this type of transparency and information flow can we hope to drive the changes needed.

      I believe that if investors are provided with information about the amount of toxic pollution, greenhouse gas emission, adverse health impact and death, human rights abuse, severe controversies, and other social and environmental impacts of their investments, many more investors will be motivated to change their portfolios. The same holds true with consumers; if your credit card or bank statement shows the contribution to social and environmental impact, you likely will begin to make different choices.

      Creating a Virtuous Cycle

      We're still at the early stages, but once impact reporting gets started, the logical result is that investors will start to ask more questions. Shining a little bit of light will make people more eager to know the whole story, and the amount of disclosure and transparency will continue to increase. This should also have a positive effect on shareholder engagement. Armed with a complete information system, it will be much easier for engagement teams to ask for real change. And increased transparency and reporting will likely encourage more concrete and positive outcomes. The more people know what to look for, and the easier it is to measure progress, the more likely we will be able to influence the change we need.

      David MacKay, who wrote "Sustainable Energy Without the Hot Air" in 2008 to draw early attention to a potential fossil-free energy system, said, "If everyone does a little, we'll achieve only a little." We are long past the stage where a little bit of Responsible Investing can help protect the environment and society along with our clients' investment dollars. Instead, the coming year will see our clients demand that we do a lot, and provide them with data that proves we are performing as we promise.

      To read the full article on GreenMoneyJournal.com click here.

      Bottom Line: With better data and transparency, and more developed impact metrics, we can help accelerate the rate of progress, which is essential on every level.