Monitor

Track progress vis a vis targets and adjust as required.

Last updated: May 26, 2022

Overview

Investors and financial institutions can monitor their actions, impacts and sustainability performance over time. This enables them to respond to new information and adjust their strategy and practice accordingly.

When tracking, they might consider several management questions:

Am I successfully executing my action plan?

Investors and financial institutions can track their actions related to allocation decisions, engagement, and structuring of products and services. In each case, they assess whether they have been able to execute the actions as planned.

Are individual investees/clients meeting their sustainability targets?

Investors and financial institutions who have set asset or investee/client specific targets can check whether these are meeting agreed targets on previously defined sustainability topics. They can also periodically review the investee’s/client’s own impact management practices.

Am I achieving my portfolio-level sustainability targets?

Investor and financial institutions can compile portfolio aggregated metrics and classifications, compare them to the targets they previously set and try to understand reasons for any divergence.

Do I understand the relationship between my portfolio or asset’s financial and sustainability performance?

As the understanding of their portfolio’s sustainability performance improves, investors and financial institutions test whether their assumptions about the interrelationship between financial and sustainability performance are correct.

Are any adjustments needed?

Taking all of the above into account, as well as changes to the general operating context, investors and financial institutions can update their strategy, targets and action plan, as required, by the dynamic nature of both portfolios and individual investees/clients.


Resources

CDP Financial Services Disclosure System

Last updated: 2021

Tools for investors, companies, cities, states and regions to manage their environmental impacts. The CDP Financial Services Disclosure System allows for a baseline assessment of climate-related risks, opportunities and impacts in financing portfolios; and of how banks, asset owners, asset managers and insurance companies are preparing for the net-zero carbon transition.

CDP’s Disclosure System

Last updated: 2021

Tool for investors, companies, cities, states and regions to manage their environmental impacts. The CDP Disclosure System supports companies in making their environmental impact transparent to stakeholders, better understanding how they can reduce their impact, and act to become environmental leaders.

For organisations

Use this resource to:

  • Identify sustainability topics: Fill in CDP’s questionnaires to understand the relevant climate change, forests and water security impacts to measure, based on the organization’s size, sector, and geography.
  • Measure sustainability performance: Use CDP’s questionnaires as sets of environmental metrics.
  • Assess impact: Fill in the questionnaires to track change in performance over time. Each question is scored – some with reference to social or ecological thresholds – to help the organisation determine whether it is performing sustainably on that topic.
  • Disclose: Report to all stakeholders on climate change, forests and water security. The questionnaires provide a framework for companies to report environmental information to their stakeholders covering governance and policy, risks and opportunity management, environmental targets and strategy, and scenario analysis. Receive an A-D grading based on questionnaire responses.
  • Benchmark: Tool allows companies to benchmark their environmental performance against their industry peers and receive feedback on their progress each year. The information disclosed is also used by financial markets for stewardship and engagement, in investment research, new financial products, and global indices and ratings.

For investors and financial institutions

Use this resource to:

  • To be completed.

 

Due Diligence for Responsible Corporate Lending and Securities Underwriting

Last updated: 2019

The overall objective of the Initiative is to advance human rights and positive outcomes for people through investor stewardship. The Initiative will primarily seek change through investors’ use of influence with a global framework for financial institutions to identify, respond to and publicly communicate on environmental and social risks associated with their clients.

Use this resource to:

  • Governance: Embed responsible business conduct into policies and management systems.
  • Identify: Understand the expectations of responsible business conduct, including a discussion of key considerations when identifying negative impacts and risks.
  • Assess: Understand the key considerations in carrying out due diligence as recommended by the OECD Guidelines for Multinational Enterprises (OECD Guidelines). This helps to prevent and address adverse impacts related to human and labour rights, the environment, and corruption caused by financial institutions in the context of their corporate lending and underwriting activities.
  • Monitor: Monitor due diligence processes to prevent and address adverse impacts related to human and labour rights, the environment, and corruption caused by companies.

Guiding Principles on Business and Human Rights

Last updated: 2012

The UN Guiding Principles on Business and Human Rights are a set of guidelines for States and companies to prevent, address and remedy human rights abuses committed in business operations.

Use this resource to:

  • Strategy: Adopt the standards and practices with regard to business and human rights so as to achieve tangible results for affected individuals and communities, and thereby also contribute to a socially sustainable globalisation.
  • Governance: Embed the human rights policy throughout a business’ functions.
  • Identify: Understand the responsibility of enterprises to respect human rights, depending on their scale and scope.
  • Assess: Implement human rights due diligence.
  • Set Targets: Design targets based on human rights due diligence assessment.
  • Act: Learn how states and companies can prevent and address negative impacts on human rights by business.
  • Monitor: Set up continued human rights due diligence for monitoring purposes.
  • Disclose: Make publicly available human rights commitments and processes.

IRIS+ for Impact Due Diligence

Last updated: 2020

Guidance on constructing due diligence questions based on the investor’s impact goals.

Use this resource to:

  • Identify: Use for impact due diligence, specifically the anticipated impacts before an investment decision.
  • Assess: Integrate impact measurement and management into the due diligence process to aid in assessing and managing impact risk.
  • Monitor: Construct a set of due diligence questions that uses the IRIS+ system and evidence base.

OECD Due Diligence Guidance for Responsible Business Conduct

Last updated: 2018

Guidance that provides practical support to enterprises on the implementation of the OECD Guidelines for Multinational Enterprises by providing plain language explanations of its due diligence recommendations and associated provisions.

For organisations

Use this resource to:

  • Governance, strategy, and management approach: Assist enterprises with developing and strengthening their due diligence system, as well as processes related to impacts in operations, supply chains, and business relationships.

For investors and financial institutions

Use this resource to:

  • Governance: Embed responsible business conduct into policies and management systems.
  • Identify: Use guidance for expectations of responsible business conduct, including a discussion of key considerations when identifying negative impacts and risks.
  • Assess: Understand the key considerations in carrying out due diligence, as recommended by the OECD Guidelines for Multinational Enterprises (OECD Guidelines). This helps to prevent and address adverse impacts related to human and labour rights, the environment and corruption caused by companies.
  • Monitor: Monitor due diligence processes to prevent and address adverse impacts related to human and labour rights, the environment, and corruption caused by companies.

Operating Principles for Impact Management

Principles describe essential features of managing investments into companies or other organisations with the intent to contribute to measurable positive social or environmental impact alongside financial returns.

This resource has mandatory requirements for signatories.

Use this resource to:

  • Strategy: Define strategic impact objectives consistent with the investment strategy alongside managing strategic impact on a portfolio basis.
  • Governance: Commit to following the principles and periodically having progress of adoption independently verified. The Principles can be applied to an entire investing organisation or an individual fund.
  • Monitor: Use criteria for which investor’s impact management practices can be monitored. The principles require these disclosures to be independently verified.
  • Disclose: Use Principle 9 to enable public disclosure of alignment with the Principles.

Responsible Business Conduct for Institutional Investors

Last updated: 2017

Guidance that explains the application of the OECD Guidelines for Multinational Enterprises in the context of institutional investors. The report highlights key considerations for institutional investors in carrying out due diligence that will help to identify and respond to environmental and social risks.

Use this resource to:

  • Governance: Embed responsible business conduct into policies and management systems.
  • Identify: Understand the responsible business conduct expectations for institutional investors, including a discussion of key considerations when identifying negative impacts and risks.
  • Assess: Understand the key considerations for institutional investors in carrying out due diligence as recommended by the OECD Guidelines for Multinational Enterprises (OECD Guidelines). This helps institutional investors to prevent and address adverse impacts related to human and labour rights, the environment, and corruption caused by companies in their investment portfolios.
  • Monitor: Monitor due diligence processes to prevent and address adverse impacts related to human and labour rights, the environment, and corruption caused by companies in their investment portfolios. 

Definitions

Investor

A person, organisation, or country that puts money into an business or other organisation.

Source: Cambridge English Dictionary

Impact

A change in an aspect of people’s well-being or the condition of the natural environment caused by an organisation.

Source: Impact Management Platform; Well-being defined as in OECD Well-being Framework

Asset

Used on this site to refer to a security such as debt or equity issued by an organisation, or a physical asset such as land or a building.

Source: Adapted from Investopedia (definitions of ‘financial asset’ and ‘real asset’)

Sustainability topic

A term used broadly to denote aspects of stakeholder well-being (e.g. health, wealth, safety), or business activities or practices that are evidenced drivers of well-being (e.g. employment, diversity and inclusion). This term is synonymous with ‘sustainability matters’, ‘impact areas’, ‘impact categories’ or ‘general issue categories’ which are similar terms used by different standard setters.

Source: OECD Well-being Framework; Global Reporting Initiative (GRI) Sustainability Topics; Sustainability Accounting Standards Board (SASB) General Issue Categories; IRIS+ Categories; United Nations Environment Programme Finance Initiative (UNEP FI) Impact Areas

Practice

A way of doing something that is the usual or expected way in a particular organisation or situation.

Source: Oxford English Dictionary

Metrics

A standard of measurement. The words ‘metric’ and ‘indicator’ are typically used interchangeably. Metrics are used to measure the state of something at a point in time. Repeated measurement makes it possible to determine change over time.

Source: Adapted from Meriam Webster Online Dictionary

Context

Refers to the circumstances that form the setting for an event, statement, or idea, and in terms of which it can be fully understood. Here the term specifically refers to the other information that an organisation needs to collect to fully understand what type of impact has occurred, in order to make a judgement about the nature of the performance. This contextual information is sometimes referred to as the multi-dimensional nature of impact. See Assess Impacts.

Source: Oxford English Dictionary

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