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Why It Matters: ESG vs. Impact: Interview with Dawn Chan, CEO of CIIP on Money FM 89.3

Published on 11/10/2022

Hear from Dawn Chan, CEO, Centre of Impact Investing and Practices (CIIP), as she explains the key differences between ESG and impact investing, in the recording of the interview. 

The interview centres on the differences between ESG and impact investing, and how the impact ecosystem could be strengthened. Dawn shared on CIIP’s mission and how CIIP aims to build knowledge, bring together stakeholders and spark collective action in the community. She shared that impact investors and impact-oriented businesses go beyond compliance and reporting, and aim to generate positive social and/or environmental impact alongside a financial return. Impact investors and practitioners are also looking to contribute to solutions that go towards achieving the UN Sustainable Development Goals. She shared that many businesses in Asia have a history of active involvement in the community, and CIIP had worked with Accenture and SMU on the report to raise awareness of the good work in Asia, and to uncover the opportunities and challenges of driving impact in the region. Dawn gave a few examples of the case studies presented in the report, including ABC Impact and its investment in Kim Dental. She encouraged listeners to find out more about these stories.

Excerpts from the interview:

02:34 - Key differences between ESG and impact investing

“ESG is adopted as a framework that provide standards and performance indicators for companies and investors to monitor and report their environmental, social, governance performance and practices. Companies currently use ESG for compliance, risk mitigation, measurement and reporting. Impact investing, on the other hand, already integrates ESG into the organisation’s processes. Impact investors and impact-oriented businesses go beyond compliance and reporting. They are looking to generate positive social and / or environmental impact alongside a financial return. They are looking to contribute to solutions and help achieve the UN’s 17 sustainable development goals (SDGs). Impact investors and companies report their progress and they measure their positive and negative impact, whether intended or unintended. Considerations of business positions are incorporated alongside the related impact on the environment and community.”

04:27 – CIIP’s report : ‘Scaling Impact in Asia: Achieving Purpose and Profit’

“CIIP worked with Accenture and Singapore Management University (SMU) to raise awareness of the good work that has been done in Asia in terms of impact. It explains what impact investing is and uncovers opportunities and challenges of driving impact in Asia. Accenture’s global study of 26,000 individuals uncovered that over 77% of the youth in Asia aspired to be part of the green economy, higher than the 50% reported in EU and US.”

06:24 – Misunderstanding that putting funds into ESG is a form of impact investing

“People have different definitions of ESG. Some people think that ESG came about to solve environmental and social problems. Over the years, it got mixed up with compliance and reporting regulations. Many of the funds seen in recent greenwashing scandals used the term ESG for investment products that simply met a particular set of standards and did not really contribute to solutions.”

09:48 - Growing a robust impact ecosystem

“First, we need to talk about developing an impact proficiency or a common lexicon to understand what each other is talking about. This includes harmonised standards or metrics for impact so everyone is measuring on the same basis. Second, we need to upskill our workforce to adopt these practices so we will not lag behind practices that are happening in the US or Europe. Third, we need to enhance the data quality and infrastructure to support the collection and exchange of impact data, as well as have an industry wide baseline and benchmark to provide visibility and understanding of impact outcomes. Lastly, we need to enhance capital flow by raising awareness to investors about how they can do impact investing. “

11:20 – Where Southeast Asia is at in terms of impact investing and challenges that remain

“Southeast Asia is still in the early stages, but that also means there is huge opportunity. We need to unlock more potential, collect more data, and provide more innovative financing solutions.”

13:00 – Advice for organisations looking at impact

“It’s about asking the right questions, putting in place practices to measure impact, and have the intention of looking to solve a problem.”

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