The Association of Chartered Certified Accountants (ACCA), working with the Universities of Witwatersrand and Leeds, has introduced a framework aimed at connecting environmental and social factors with investment and capital allocation strategies.
Published ahead of COP 30, the guidance outlines a method for businesses to factor sustainability considerations into their investment planning.
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The document identifies eight main steps: ESG integration, adopting sustainability frameworks, screening approaches, investor engagement, defining strategic objectives, selecting investment options, meeting regulatory standards, and tracking results.
The ACCA notes that there is no agreed definition of responsible investment, despite its growing influence on investment decisions.
The process of identifying which environmental and social matters are material to an investment strategy remains complex.
Investors are said to assess a mix of qualitative and quantitative extra-financial risks, which may include stakeholder interests, legal obligations, and direct or indirect dependencies.
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By GlobalDataThe report also suggests that progress in sustainability reporting is ongoing.
According to the ACCA, many investees need to go “further in balancing financial, ecological and social value creation if they are to better access and service responsible finance.”
University of Witwatersrand associate professor at the School of Accountancy Dannielle Cerbone said: ‘This academically rigorous report provides a comprehensive but concise reference for investors, asset owners and regulators in an increasingly complex landscape.’
ACCA Sustainable Business head Sharon Machado 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.”
A recent report by the ACCA, titled ‘The Climate Tech Forecast,’ revealed that 66% of organisations surveyed consider climate technology to be essential or anticipate its growing importance in the future.
