Thinking Ahead Institute warns of measuring investment impact in isolation

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[{"type":"text","content":"Leading investment organizations develop a framework to link impact to value creation\nARLINGTON, Va., Oct. 06, 2020 (GLOBE NEWSWIRE) -- Research by Willis Towers Watson’s Thinking Ahead Institute warns institutional investors that they risk a disconnect between ambition and reality if they focus on measuring investment impact without explicitly linking it to value creation for stakeholders.\n In a research report from its sustainability impact working group* — titled Sustainability: understanding impact and value creation — the Institute warns that investment organizations need to be wary of the gap between their positive intentions for a more sustainable economy and their ability to deliver it. “Most investors tend to focus on the measurement of their impact but stop short when translating this into an evidence-based narrative that clearly explains how these sustainability metrics translate into value and outcomes for each stakeholder. Critically this should also include future expectations that can inform investors’ deployment and stewardship of capital,” said Marisa Hall, co-head of the Thinking Ahead Institute. To help bridge this gap, the working group devised a scorecard to monitor value-creation activities across a range of stakeholder groups and a four-step self-assessment framework to identify areas of desired improvement: Identify who the key stakeholders are and understand their expectations and needs to determine what is valued.Align organizational purpose with the desired outcomes by understanding which stakeholders the organization prioritizes.Identify gaps between current practice and desired norms that align with the organization’s beliefs and value systems, evaluating these systematically through tools such as questionnaires and scoring systems.Openly discuss the results and gaps to develop an internal action plan. As a fifth step, the working group recommends that the output of this impact and value-creation assessment should be communicated externally. “Historically, articulation by the investment industry of value creation linked to purpose and impact has been poor. But this is changing as stakeholders increasingly expect authentic, intentional and transparent communication of the value they can expect now and prospectively. While challenging, we believe this can be achieved by using the integrated reporting...

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