IEMA has today called for more focus on issues that are directly relevant to sustainable investment in a new standard being drafted by the British Standards Institution (BSI).
Last month, IEMA publicised the fact that the BSI had published the first in a series of Publicly Available Specifications (PAS) in its Sustainable Finance Standardization Programme to help define globally applicable standards for the finance sector.
The standard, known as PAS 7340:2020 Framework for embedding the principles of sustainable finance in financial services organizations – Guide, provides a framework for financial services that wish to be sustainable and better aligned with global initiatives like the United Nation's Sustainable Development Goals (SDGs) and the Paris Agreement.
As an active member of the steering group that is producing the series of standards, IEMA has consulted with members and key stakeholders with experience working on sustainability issues within the financial sector, to collect views on the second draft PAS in the programme, PAS 7341 Responsible and sustainable investment management – Specification.
In its response to the draft PAS 7341, IEMA has today welcomed the development of the standard. As the second PAS in the series, IEMA found that it closely follows and builds upon the common terminology and set of principles laid out in PAS 7340, to help organisations identify, develop and maximise opportunities that address sustainability challenges.
Providing critical feedback on several sections of the PAS, IEMA called on the need for PAS 7341 to make less extensive reference to PAS 7340 and suggested wording for additional sections on issues such as divestment, stranded assets and authenticity, which are directly relevant to sustainable or responsible investment management.
Pointing out that the current definition of 'additionality' appeared to be limited to a financial sector view, IEMA found that sustainability should be applied in all its aspects (including reference to social sustainability) with appropriate and balanced consideration of environmental and social impacts, risks and issues.
It also called on the BSI to tighten up the commitments required of investment firms, noting that the use of non-prescriptive language within the PAS lent it to be interpreted as a guidance standard rather than a verifiable standard.
Finally, commenting on governance approaches to responsible and sustainable investment management, IEMA stressed the importance of tighter drafting that would specify the type of measurement approaches required. This would ensure organisations do not embed investment management practices that circumvent the objectives of the Task Force on Climate-related Financial Disclosures TCFD, science-based targets, and the SDGs.
For more information on the BSI Sustainable Finance Standardization Programme, including the third upcoming PAS on sustainable finance products and funds, please click here.
