Part 1: Fostering Action Through Green Investment
The information in this article is for educational and informational purposes only. It is not intended to provide financial or investment advice.
As the climate crisis escalates, we’re seeing its profound impact around the world. In the UK, coastal flooding, struggling agriculture, disrupted ecosystems, biodiversity loss, and increased air pollution have left their mark on the landscape and communities. Outside the UK, the global south is disproportionately affected. It bears the brunt of climate change -– despite contributing the least to global greenhouse gas emissions, underlining that our actions in the UK can have a far-reaching impact. It’s becoming ever more clear that the E in ESG (Environmental, Social, Governance) isn’t an isolated factor, and it directly impacts the mental well-being, health and livelihood of people around the world, overlapping with pressing social issues.
Last week the COP16 conference in Cali, Colombia, the UN’s Biodiversity Conference, further called to attention the critical need for regenerative finance and sustainable practices, particularly through the influence of private capital. The forum not only emphasised the foundational role of Indigenous communities as ecological stewards in conserving biodiversity, but also challenging governments and influencing asset managers to reimagine value beyond profit. The push for private capital to act as a necessary force in divesting from harmful practices aligns with the work of pension funds and asset managers like Regenerative Asset Management and LGT Capital Partners, who are pioneering sustainability-focused investments. COP16 called for definitive and immediate action across sectors, aiming to empower both public and private entities to safeguard vital ecosystems.
Back in the UK, leaders in impact and social investment have a unique opportunity to drive meaningful environmental change, bringing emotional intelligence, innovation, and commitment to people and the planet to their work. By engaging in sustainable initiatives and partnerships, fostering innovation, and advocating for green policies, they can help build climate resilience, create more equitable outcomes, and pave the way for a more sustainable future.
Regulation, Frameworks and Tools for Sustainable Investment
Naturally, there is a rising demand for investment in climate solutions as part of ESG strategies. In 2023, the UK government updated its Green Finance Strategy, which laid the foundation for aligning private finance with climate objectives. This includes the goal to achieve net-zero emissions by 2050 and emphasises mobilising private capital toward clean growth and sustainability. In 2021, The UK became the first country to mandate a Task Force on Climate-related Financial Disclosures (TCFD) reporting, requiring large businesses to disclose how climate risks impact their financial stability. The concept of a Green Taxonomy was also introduced to define which economic activities qualify as environmentally sustainable.
There has also been a rise in sustainable investment products, demonstrating the shift in capital flows towards sustainability. For example, fixed-income financial instruments like green bonds are specifically designed to raise capital for projects with environmental benefits. They offer a way for impact investors to achieve a combination of predictable returns and a clear contribution to environmental sustainability. Another tool is the FTSE4Good Index, a stock market index designed to measure the performance of companies that meet global standards for ESG practices.
It’s important to note that it’s not enough to simply go through the motions of standardised ESG practices to truly make strides towards sustainability. In this comprehensive article, Harvard Business School’s George Serafeim, suggests that ESG efforts must be deeply integrated into strategy and operations. While challenges like greenwashing concerns, difficulties for SMEs, and a lack of unified standards are obstacles for tools and regulatory frameworks to fully achieve their potential, they are intended to direct investment towards projects that align with the UK’s environmental goals and encourage investors to consider environmental risks when making decisions.
Catalysing Environmental Change Through Green Investment Cross-Sector Initiatives
In combating climate change, impact finance is pivotal in driving high-impact environmental solutions and fostering sustainability. By mobilising investments into sectors such as renewable energy, climate tech, and sustainable infrastructure, impact finance can be fundamental in de-risking environmental projects for broader investment, unlocking private capital and facilitating a just transition.
In recent years, there have been some inspiring green investment initiatives and partnerships from which to draw inspiration. These demonstrate strategies for driving impact, such as leveraging collaborative partnerships, empowering communities, integrating sustainable finance and creating alignment between public and private sectors.
Bristol & Bath Regional Capital’s NetZeroCities Project is a key example of how impact finance can facilitate large-scale environmental projects through leveraging partnerships. BBRC harnessed impact finance and collaboration with the EU Cities Mission to tackle regional climate challenges. By localising solutions through cross-sector partnerships (in this case, partnering with city councils and local businesses to co-develop the project), leaders can focus on regional or community-based projects that align with broader climate goals. Exploring blended finance models, combining public funds with private investments, can also reduce risk and enhance investment appeal, bolstering the viability of scalable environmental initiatives.
Another powerful case study for social impact leaders to draw upon is the Better Society Capital, Power to Change, Finance Earth, and Co-operative Energy’s CORE Partnership, which successfully empowered community businesses to take ownership of renewable energy projects. The project originally invested in eight solar farms, working with six community partners to transfer the solar assets into community ownership. Social impact leaders can apply the principles of this initiative to their own climate resilience work by engaging community leaders and involving local stakeholders every step of the way, creating long-term ownership models, focusing on capacity building and partnering with local businesses, government and NGOs. This project highlights the potential of inclusive and decentralised renewable energy solutions.
When it comes to Family Offices and Foundations, organisations like The Environmental Funders Network (EFN) have been instrumental in providing resources, connecting donors, and supporting the environmental funding community. They support strategic philanthropy that addresses various environmental challenges and advocate for systemic changes through philanthropy, which includes supporting diverse and underfunded environmental projects. Leaders can learn from EFN’s work in the sector by integrating collaboration and knowledge-sharing, encouraging evidence-based decisions and supporting underfunded and diverse initiatives.
Climate tech has emerged as one of the most promising areas in combating the climate crisis, and London Climate Tech startups raised all-time high levels of VC investment in 2023. To a leader in social impact, driving environmental change in this area might involve encouraging investors to take calculated risks on early-stage climate tech innovations. Diversifying portfolios by including high-potential climate tech startups and engaging in early-stage funding where traditional venture capital might be more cautious are strategies that social impact leaders can adopt. By funding projects focused on renewable energy, conservation, and green infrastructure, these organisations show how risk-tolerant capital can drive innovation and long-term climate resilience.
Communities dedicated to scaling projects, driving green innovation, and creating impactful investment opportunities by connecting diverse stakeholders are crucial in the climate tech sphere. Connector initiatives like ClimateImpact bring together key players in climate tech via forums, workshops, and events that unite climate technology innovators with investors, policymakers, and corporates. Similarly, organisations like The Conduit provide platforms for knowledge-sharing, amplifying critical discussions and gathering industry, financial, and sustainability leaders to consider transformative climate solutions.
As Quyen Tran, director of impact investing at BlackRock, told Private Equity International: “Impact investing can play an essential role in addressing climate change because we are effectively investing in innovation, including disruptive business models and technologies that can drive positive change for people and the planet. We need far more solutions than we have to address climate change goals. Impact investing is a pathway that bridges that imbalance by strategically supporting innovative business models and disruptive technologies tackling climate change.”
Empowering and Investing in People
None of this important work can be done without the right talent leading the charge. Recruiting for green investment roles requires a nuanced balance of financial acumen, environmental expertise, and a deep commitment to social impact. We explore the skills needed to drive change, and how to develop and nurture them in our blog pieces, Leading with Purpose: How to Develop the Skills to Drive Social Impact, Balancing Finance and Social Change: A Guide For Identifying Senior Leaders, and Part one and two of our series, Navigating a Career Transition: How to Leverage Corporate Experience in the Purpose-Driven Sector.
Careers4Change is committed to finding professionals who not only understand the technical aspects of green finance—but also bring a passion for community, responsible leadership, and systems change. The candidates we work with can navigate the complex landscape of sustainability, foster collaborative partnerships, and communicate the value of impact investment to diverse stakeholders. Impact investing, and specifically the green finance industry, is more urgent and fast-paced than ever—organisations need adaptable leaders who are willing to embrace innovation, prioritise inclusivity, and foster long-term outcomes.
Measuring Impact and Accountability
Adopting robust ESG reporting frameworks is essential when working toward impactful and long-term environmental change. Established global frameworks like the Impact Management Project (IMP) or GIIN’s IRIS+ or UK-focused tools like SROI and Social Value Portal provide standardised tools for measuring both environmental and social impact, ensuring consistency and transparency across sectors. By integrating these into investment and operational processes, impact leaders can clearly articulate the outcomes of work and demonstrate transparency to stakeholders, ensuring that both financial and non-financial returns are captured. They should consider setting targets before launching projects, track progress regularly, adjust as needed to stay aligned with long-term climate objectives and report progress transparently to stakeholders.
Other methods, like impact-weighted accounts, which integrate environmental and social factors directly into financial statements, allow leaders to report on environmental savings alongside financial performance. Carbon impact metrics, which measure how well investments or projects reduce carbon footprints, allow leaders to compare financial returns with sustainability metrics. Engaging independent, third-party auditors like Climate Bonds Initiative (CBI) for green bonds or B-Corp certification for companies can ensure funds are directed to projects with significant and tangible environmental benefits.
There is so much work to be done across the sector to reach net zero by 2050, and while a lot of this must fall to governments, large corporations, investors and financial institutions, there is still room for community businesses and SMEs to make a difference. In part two of this series on how social impact leaders are fostering climate resilience and driving environmental change, we’ll shift our focus to the grassroots level, diving into how social enterprises and community organisations can lead in this sector. We’ll explore practical strategies for building partnerships, accessing funding, and implementing sustainable practices.
If you’re interested in exploring roles in impact finance and social innovation, or finding the right talent for your organisation, reach out to us at info@careers4change.com.
