The Susilo Institute for Ethics in the Global Economy and the BU Institute for Sustainable Energy announced the Impact Measurement and Allocation Program (IMAP), a multi-year research effort to support change in corporate behavior and accelerate a transition to a sustainable economy, made possible by generous support from alumni donors.
Created in response to the rapid growth of impact investing as a mainstream asset management strategy, IMAP will equip investors with more meaningful environmental, social, and governance (ESG) metrics to measure corporate impact.
“Real progress toward social change for the good requires investment, and smart investors need ways to evaluate their alternatives and gauge their relative impacts. Climate change, socio-economic inequality, non-sustainable manufacturing practices: these thorny grand challenges require multi-pronged interdisciplinary collaborations for their resolution,” said Susan Fournier, Allen Questrom Professor and Dean of the Questrom School of Business at Boston University.
Paying special attention to the environmental and social impacts of investments has been steadily becoming the norm. Since 2006, over 3,000 investor signatories representing over $100 trillion in assets have committed to advancing the United Nations Principles for Responsible Investment.
While the interest in adopting ESG principles in investment decision-making is plentiful, quality data is still a barrier to making real change. The goal IMAP aims to achieve is to provide practical solutions to this problem by improving the framework used to measure a company’s impact on ESG factors and then to facilitate the rapid adoption of improved measures by money managers and other practitioners.
“Boston University’s Impact Measurement and Allocation Program will attack the current pain points for ESG practitioners, with the goal of giving both corporates and asset managers a new gold standard for capturing their environmental and social impact with reliable and meaningful investor metrics,” said Nalin Kulatilaka, IMAP co-founder and co-director of the Susilo Institute at the BU Questrom School of Business. “Boston University also brings academic independence and scientific rigor to its analysis, offering full transparency to encourage broad adoption.”
The first phase of the program will examine two areas in which ESG metrics have been particularly challenging—Scope 3 greenhouse gas emissions (emissions related to a company’s business activities but beyond their direct control, such as leased assets, commuting, investments, etc.), and compliance with labor laws and adherence to fair labor practices throughout the value chain.
“We have selected two components of ESG that are widely regarded as the most in need of attention—so-called “Scope 3” or value chain emission sources, which can represent the majority of a company’s greenhouse gas emissions, and labor issues,” said Peter Fox-Penner, the other IMAP co-founder and director of the BU Institute for Sustainable Energy. “These are not only drawing investor attention but also can provide early insights into hidden risks.”