Ahead of COP 30 later this month, leading global accountancy body ACCA has created a unique, unified approach to responsible investment comprehensively integrating sustainability considerations into strategy. 

In Understanding Responsible Investment ACCA (the Association of Chartered Certified Accountants) has produced – in collaboration with the Universities of Witwatersrand and Leeds – a comprehensive yet concise framework setting out the right links between environmental and social issues and capital allocation and investment decisions. 

By following eight steps an organisation can map how its financial success is linked to environmental and social considerations. 

A generally accepted definition of responsible investment has never existed despite the fact  that the concept has driven a fundamental shift in how investment decisions are made by investors, asset managers and owners.

Sharon Machado, Head of Sustainable Business, ACCA, said: ‘Despite all the expectation on business increasingly having to grapple with climate change and social inequity, to date no unified approach to responsible investment has been produced. Thanks to collaboration and deep analysis of a variety of frameworks, we have now created one: identifying eight core components of responsible investment and creating an integrated thinking model, which ensures all risks and opportunities are systematically incorporated into investment analysis and capital allocation.’ 

Determining which social and environmental issues are most relevant in the context of an investment strategy is a challenging task. Investors typically assess a range of extra-financial factors according to their materiality. They use a combination of qualitative and quantitative factors – such as stakeholder expectation, regulatory requirements, and direct and indirect dependencies.

Dannielle Cerbone, Associate Professor at the School of Accountancy, University of Witwatersrand, said: ‘This academically rigorous report provides a comprehensive but concise reference for investors, asset owners and regulators in an increasingly complex landscape.’  

The eight core steps are: 

The responsible investment framework 

• ESG integration 
• Sustainability frameworks
• Screening methods
• Investor proactivity 
• Strategic purpose 
• Investment options selection
• Regulatory requirements and standards
• Measuring outcomes.

Responsible investors recognise that sustainability reporting is still evolving. It is clear from producing this report that many investees must go further in balancing financial, ecological and social value creation if they are to better access and service responsible finance.

Machado said: ‘We hope this report will prove of practical use to investors and companies. For instance the report provides a method of assessing the impact of sustainability-related factors on an organisation’s valuation - a task which is far from straightforward.’ 

Read the Shorthand report 

Editor’s Note

ACCA’s report next week (10 Nov) Sustainability reporting: track your progress provides further support on creating decision-useful interconnected sustainability and financial information 

See also the Track Your progress video Sustainability reporting – progress in creating decision-useful information.

– ends –

For media enquiries, contact:
ACCA News Room
E: newsroom@accaglobal.com
Twitter/X: @ACCANews
accaglobal.com

About ACCA

We are ACCA (the Association of Chartered Certified Accountants), the only truly global professional accountancy body. Since we were founded in 1904, we’ve been breaking down barriers to the accountancy profession. Today we proudly support a diverse community of over 257,900 members and 530,100 future members in 180 countries.
We’re redefining accountancy. Our cutting-edge qualifications, continuous learning and insights are respected and valued by employers in every sector. They equip individuals with the business and finance expertise and ethical judgment to lead and drive sustainable value in organisations and economies worldwide.
Guided by our purpose and values, we’re leading the accountancy profession for a changed world. Partnering with policymakers, standard setters, the donor community, educators and other accountancy bodies, we’re strengthening and building a profession that focuses on people, planet and prosperity to create value for all. 

Find out more at: www.accaglobal.com