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April 19, 2024

Impact investor is never (completely) satisfied

Kaisa Alavuotunki

When you are in the business of impact investing and work on impact and sustainability, you can never be completely satisfied with your current stage. The industry has been evolving very rapidly from pretty niche do-good-businesses to credible and powerful mainstream investment strategies of large asset owners. The one who stays still gets rapidly pushed out as outdated.

The challenge for an impact investor is not to find new ideas but to understand where to focus on. New themes keep emerging: How do you ensure gender equality in your investing strategies? Have you already considered your impact on biodiversity? Are you complying with human rights due diligence approach? How do you assess climate change adaptation opportunities?  How are your investments affecting planetary boundaries?

Systematic approach on sustainability and impact

At Finnfund we are happy to have a solid strategy that has guided our work since 2022. To make it work, there must be constant reflection in this changing world, but I must say, that to a large extent, we find that many of our current priorities on impact and sustainability remain as relevant as ever.

We are committed to step up our game in biodiversity, climate finance, and in terms of assessing and mitigating risks to human rights. The big push of today is to be able to design all these interlinked themes into a systemic approach acknowledging both negative risks and identifying the potential for positive impacts.

Discussions help harmonise approaches

No person is an island, and organizations, too, do not exist in a vacuum. This is why a fair amount of my time is currently spend networking with colleagues and stakeholders in workshops and seminars. For example, a couple of days ago I returned home from a gender lens investing network, already looking forward to meeting my fellow sustainability colleagues over a breakfast in a few days as well as a fully packed conference on impact investing. As exhaustive as it might sometimes get, these meeting hold great importance for many reasons.

Perhaps the most important one is that particularly the discussions with colleagues and peers help harmonize and simplify approaches to these complex issues which makes our work far more effective than working on your own.

From “what for” to “how”

I give you an example.  We have been asking questions on gender equality from our investee companies for over a decade. Some companies took that topic seriously while some raised their eyebrows (what for, they asked). It was not until the launch of 2X Global gender equality criteria in 2019, when it became possible to start mainstreaming these demands.

Companies knew that all investors like us would come in with specific interest on gender equality. We started with a dozen organizations, and now we have common criteria across 150+ all using the same threshold and criteria. Companies are no longer asking “what for?” but “how?” as they have started to identify challenges and work on them.

This is the hope for other complex topics as well. We need simple, yet credible frameworks, and investors requiring similar things together. This is doable but needs committed organizations and lots of cooperation across actors.

Kaisa Alavuotunki
Director, Impact and Sustainability

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