Released by the finance-sector-led Impact Disclosure Taskforce, a new voluntary guide designed for countries and companies seeking financing for projects with a measurable social or environmental impact, could unlock an additional $200 billion annually for sustainable development according to JPMorgan executive.
The guide aims to address the $4.2 trillion annual shortfall in financing needed to meet the United Nations’ sustainable development goals (SDGs). While some forms of environmental, social, and governance (ESG) financing, such as green bonds or sustainability-linked loans, have been classified by the market for some time, there has been no universal framework for assessing lending designed to create positive social or environmental outcomes.
Many issuers have faced challenges in attracting investors due to the lack of reliable data, clear targets, and transparent reporting on the impacts of their investments. The new guidance introduces a five-step process for issuers, which includes assessing strategy alignment with a country’s most critical needs, defining desired outcomes, setting impact targets, and reporting on progress.
“This creates a consensus within the market on how development impact should be measured and disclosed,” said Arsalan Mahtafar, head of JPMorgan’s development finance institution team. JPMorgan, the largest US bank, estimates that over $200 billion worth of projects could be available annually to impact investors, based on the bank’s development finance goals.
Timothee Jaulin, head of ESG development at asset manager Amundi, which is also part of the Taskforce, noted that the guidance will help investors better evaluate countries’ sustainability criteria.
Co-chaired by JPMorgan and Natixis, the Taskforce includes more than 50 members such as the Asian Development Bank, HSBC, Korea Eximbank, and Standard Chartered. The guide’s release coincides with meetings of the World Bank and International Monetary Fund, where global finance strategies for addressing challenges like climate change are being discussed. It also comes ahead of climate talks in Azerbaijan this November, where developing nations are expected to advocate for more ambitious annual climate-finance targets.
