The Investment Consultants Sustainability Working Group (ICSWG) has endorsed a set of impact investing guidelines for pension schemes, saying their broader adoption would provide a stronger governance framework for investors navigating the subject of impact investment.

This in turn could increase the volume of capital directed towards sustainable solutions and supporting much-needed transformations within the global economy, the group suggested.

The principles in question were developed by the Impact Investing Institute in partnership with Pensions for Purpose, which is an organisation dedicated to promoting impact investing within the pensions industry.

Andrew Lilley, head of responsible investment research at Isio and part of the ICSWG’s impact investing team, said: “Institutional interest in impact investing has increased dramatically, especially over recent years. However, we see a great diversity of approach in implementing impact frameworks as well as inconsistencies in impact reporting.

“The ICSWG supports initiatives such as the Impact Investing Principles for Pensions that aim to bring best practice guidelines and standardisation to impact investing.”

Released in November last year, the principles are a set of guidelines on how to initiate, implement, review and measure an impact strategy.

They urge pension schemes to set ‘impact objectives’ as part of their investment policies, appoint investment consultants and managers “with impact integrity”, manage and review their impact, and formulate stewardship guidelines for voting and engagement activities.

ICSWG was set up in September last year by 12 UK investment consultants with the aim of improving sustainable investment practices across the industry.

It now counts 17 firms: Aon, Barnett Waddingham, bfinance, Buck, Cambridge Associates, Cardano, Hymans Robertson, ISIO, LCP, Mercer, MJ Hudson Allenbridge, Momentum, Redington, River and Mercantile, SEI, Willis Towers Watson, XPS Investment.

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