Who could argue with an investment that enables you to earn attractive returns with a clear conscience? It’s no wonder the market for socially and environmentally sustainable investments is booming. According to estimates, the so-called impact investing business has grown to a volume of around USD 114 billion. These investments come in a wide variety of shapes and sizes, from loans and credits to private equity and venture capital interests. Impact investing is a way for private investors, development banks, and foundations to put money directly into projects that match their goals.
But do these well-meaning investors achieve the desired impact? Do they really change the world for the better? This is one of the questions that interests the United Nations Development Program (UNDP). Since November 2016, the UNDP has had its own initiative called SDG Impact Finance designed to bring the private and public sectors together and promote sustainable investment. The aim is to play a major role in putting the United Nations’ 2030 Agenda for Sustainable Development into action. The Sustainable Development Goals (SDGs) comprise 17 targets, from ending poverty to enabling universal access to justice.
To make the impact of such investments more easily measurable and facilitate research into how more investors can be encouraged to get involved in sustainable investing, the UNDP has now entered into partnership with nine universities, including Zurich (see box). A new body, the UNSIF Research Council, has been created to coordinate research on sustainable investment.
Building on existing research
At the University of Zurich it’s the Center for Sustainable Finance and Private Wealth (CSP) that’s involved in the partnership. Established at the beginning of 2017, the center is part of UZH’s Department of Banking and Finance (see box). The center was chosen because it’s running various research and training projects around the theme of impact investment.
“Sustainable investment could become a pivotal factor in sustainable development: all the more reason to look into the relevant mechanisms and actors more closely,” explains Falko Paetzold, managing director of the CSP. The center will work on its key themes within the framework of the UNSIF Research Council. The focus is on the question of how private assets can be increasingly mobilized to finance projects running under the 2030 Agenda for Sustainable Development.
Research for sustainability
The new UNSIF Research Council comprises prestigious business schools and economics departments at nine universities; three in Europe (UZH, Oxford University, and Maastricht University), two in North America (Carleton University in Canada and the University of Pennsylvania in the US), three in Asia (China Europa International Business School, Tsinghua University, and the National University of Singapore), and one in Africa (the University of Cape Town).
Center for Sustainable Finance and Private Wealth (CSP)
The Center for Sustainable Finance and Private Wealth (CSP) at the University of Zurich does research at the interface of private wealth and sustainable finance. Among other things the center is investigating the relationship between sustainability and investment returns, and how these things can be measured. Its researchers are also looking into the question of how the idea of impact investing can best be incorporated in conventional investment portfolios.
At the CSP, Falko Paetzold (managing director), Marc Chesney, (academic head), Annette Krauss, (director for teaching) and Timo Busch (senior fellow) in particular specialize in this theme. Falko Paetzold previously co-initiated an impact investing research and training program for high-net-worth individuals at Harvard. This gave rise to the idea for the University of Zurich’s CSP. Establishing the Center was made possible thanks to generous donations to the UZH Foundation.
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