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Episode 18: Principles for Impact Investing

 

Our guest on this episode is Diane Damskey, Head of the Secretariat of the IFC’s Operating Principles for Impact Management. Diane is a senior member of the team that developed the Operating Principles for Impact Management that established a framework to bring greater discipline and transparency to the impact investing market. Prior to joining IFC, Diane was an Adviser to the Managing Director and Chief Financial Officer of the World Bank Group.

Michael Torrance leads a conversation with Diane on today’s episode about the differences between impact investing and traditional investing, and how impact investing fits into the broader sustainability ecosystem.

In this episode:

  • How impact investing started, and where it’s going in the future

  • Why many impact investments are tied to the SDGs (Sustainable Development Goals)

  • How IFC’s principles relate to other principles in the ESG space


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BMO is the 95th signatory to the IFC Principles and the first major bank in Canada to sign. READ MORE


 TRANSCRIPT:

Diane Damskey: There is growing demand for impact investments. You're also seeing major asset managers stand up and say, "We need to be more active and really focus on sustainable investing." So sustainable investing, ESG focus and the SDGs have helped mobilize that capital for impact.

In addition, COVID, I must say that everything that's going on with the COVID-19 crisis, there is an even greater focus on the need for impact investing to help rebuild economies that have been devastated.

Michael Torrance: Welcome to "Sustainability Leaders." I am Michael Torrance, Chief Sustainability Officer with BMO Financial Group. On this show, we will talk with leading sustainability practitioners from the corporate, investor, academic and NGO communities to explore how this rapidly evolving field of sustainability is impacting global investment, business practices and our world.

Disclaimer: The views expressed here are those of the participants and not those of Bank of Montreal, its affiliates or subsidiaries.

Michael Torrance: Today, I'm speaking with Diane Damskey. She's head of the Secretariat of the International Finance Corporation-led Operating Principles for Impact Management or the Impact Principles. Diane is a senior member of the team that developed the Impact Principles that established a framework to bring greater discipline and transparency to the impact investing market. As head of the Secretariat, she is responsible for the administration, promotion and growth in the number of impact investors adopting this standard. She leads engagement with the private sector asset managers, asset owners, wealth managers and family offices that are engaging with the Impact Principles.

Prior to joining IFC, Diane was an advisor to the Managing Director and Chief Financial Officer of the World Bank Group in Washington, D.C., where she led initiatives to promote private-sector investment in emerging markets. Diane joined the World Bank following over 25 years of experience with private-sector financial institutions. So, Diane, welcome to the podcast.

Diane Damskey: Well, thank you, Michael. I'm very pleased to be speaking with you today.

Michael Torrance: So to get started, for the audience, can you tell us a little bit about yourself and how you came to be leading the Secretariat of the Impact Principles?

Diane Damskey: Oh, absolutely, and first of all, let me congratulate BMO Financial Group for becoming the 95th signatory to the Principles. So welcome to the group.

Michael Torrance: Thank you very much.

Diane Damskey: I had spent, as you said, many years in private-sector financial institutions, first working with emerging markets and then moving to institutional asset management and then wealth management. In the back of my mind, I had always thought that I would devote some portion of my career to the public sector, and when an opportunity arose at the World Bank Group, I jumped at that because given my skills and experience and interests, it was a perfect fit for me.

As you may know, multilateral development banks have realized that they alone cannot meet the needs of emerging markets and developing economies, so there has been an increased emphasis on mobilizing private capital as well to help meet these needs.

So initially, I was with the CFO, and we focused on cofinancings and infrastructure, and at the same time, IFC was starting to rev up on its impact investing initiative, and I left to go to the IFC to focus on drafting the Operating Principles for Impact Management with three of my colleagues. We drafted, developed, consulted and launched the Principles within 10 months, which, for a multilateral development bank is light speed. Nothing ever happens that quickly, but it was felt to be incredibly important, and time was of the essence. So after the launch, the Principles had to go somewhere. They needed a home, so we created a Secretariat to manage, administer, promote and do everything that needed to be done for the Principles.

Given that IFC had led their development, and, as I'm sure we'll discuss during this podcast, there are several other principles and impact initiatives out there, and there was still some confusion, even when we launched the Principles, so we wanted to make sure that the Principles kept developing in the way that they were intended. So the Secretariat was determined to initially be hosted within the IFC, and I jumped at the opportunity to take on this role, given that this had been a labor of love of mine for the previous year, and it continues to be. So we're now in the second year of the Principles, but that's how I came to become the head of the Secretariat.

Michael Torrance: So, Diane, the International Finance Corporation or IFC, they are such incredible innovators in the field of sustainability. When I think of IFC, I think of the IFC performance standards, which have really set a benchmark for environmental and social risk management. You think of their innovations around green bonds and sustainability bonds. Recently, BMO worked with the World Bank for the issuance of a COVID response bond. They're just real expert authorities in this area, so I'm curious if you could tell us a little bit more about how IFC was engaging with impact investment, and I think it probably presages but also continues with the Impact Principles.

Diane Damskey: Absolutely, and just to follow on what you mentioned about the IFC performance standards, they actually became the foundation for the Equator Principles, which is basically the ESG standards for financial institutions and project finance. IFC had a tradition of helping create these standards for the market when the need arose because project-finance organizations were getting a lot of pushback on the environmental impact of some of their projects, so the ESG standards became part of what they had to include when they were building out their different project. The ESG standards, these have become kind of the ESG standards for the market and are widely used by the market as a whole.

So in impact investing (since impact is core to what IFC does), its business is having a positive impact in emerging markets and developing economies, and IFC had an impact management system. It had a method of measuring impact as well as financial returns, and as more mainstream investors started to get interested in impact, they started approaching IFC saying, "We know how to build out a private equity fund and built that. It's the impact part that we're not quite sure on," and they asked for guidance from IFC about, "How did you build your system? How did you determine you could measure impact?" because they were getting increasing amount of inquiries from their own investors to start to develop funds that provide impact alongside financial returns. So IFC's system is obviously not translatable from a huge multilateral development bank to a private-sector asset manager, but the underpinnings are what they provided to various asset managers that came to inquire, and then there were many more impact organizations that started to arise: Impact Management Project, which released the five dimensions of impact, the Global Impact Investing Network or the GIIN, which is really the large industry association for impact investors. So IFC was working very closely with GIIN and IMP and involved in many other impact conferences locally and realized that in all these conversations, there was a huge gap in what it takes and what is required to be an impact investor versus what the market understood was needed.

So that was kind of the genesis in all these conversations that I see. We need to create this framework. Otherwise, we're going to have impact washing just as you saw green washing in the green bond market. So that is how IFC became inextricably linked to developing the principles. It was probably the only organization that could have done it in this way because being an MDB, or a multilateral development bank, it's considered more neutral, and it had the respect of impact investors because it is really the largest impact investor in the public-sector community and one of the oldest. So the GIIN and other impact investors jumped at IFC's offer to lead the development of these Principles.

Michael Torrance: So stepping back just a bit conceptually, what does impact investing mean? And for our listeners who aren't so familiar with the idea, what's the difference between impact investing and regular investing and relatedly the relationship between seeking impact versus seeking financial returns?

Diane Damskey: The GIIN's definition is very similar to what we use in the Principle. It's investing in the corporations and organization with the intent to contribute to a positive measurable social or environmental impact alongside financial returns. So I would say traditional investing is where you're looking to have some kind of return, and over time, your assets continue to grow in value because you're getting a positive return on an annual basis or on average on an annual basis. Impact is like a double bottom line. So you want to have a positive impact as well as have positive financial returns over the long-term. There's three parts of impact investing. You have to have an ex ante intentionality, meaning you are targeting a specific impact before you start your investment. You have to have a contribution, a credible impact contribution narrative, meaning, why does your capital make a difference to the impact that is achieved?

Michael Torrance: So when you think of impact, it would be in relation to environmental, social or potentially governance outcomes, like ESG, all the dimensions of ESG.

Diane Damskey: It is, and it's got to be positive, meaning, ESG is the foundation for impact. ESG is all about managing potential negative effects. So ESG is really risk management. You want to take into account any potential social or environmental effects of your investment. So if you don't monitor for potential negative effects, it's impossible to say that you're having a positive impact. Without ESG, you cannot actually say you're doing impact because if you're not trying to account for the potential negative effects, you can't really say you're having a positive impact. Those two are very inextricably linked.

Michael Torrance: Are there taxonomies or definitions of what could count as impact, or is the definition rather loose and could be defined by the investor themselves?

Diane Damskey: If you get into the taxonomy, you are going to go into a deep hole and never come out because there is ... When we were developing the Principles, we started with, "Let's put the definitions out there," and even amongst this, our consultative group was about 30 private-sector and public-sector impact investing institutions, and we couldn't even agree amongst ourselves sustainable versus responsible versus impact. So we defined what it takes to be an impact investor, the three pieces, intention, contribution and measurability. So rather than get into and just say, "This word means that," I think over time, as impact becomes more mainstream, there will be more agreement on what these terms mean. But at this point in time, we just felt that that wasn't the point. We needed to create an operational framework for impact investors, so we just dropped taxonomy. There are many efforts going on. You have the EU taxonomy on green and sustainability. You have The Institute for International Finance developing different taxonomies. We consider impact investing is always going to be ESG-aligned. Impact investing will be responsible, and impact investing will focus on sustainability, so it's a subset of all of those different types of good investing.

Michael Torrance: So at BMO, one of the things that we leverage in order to understand our impacts is the sustainable development goals, and there's a lot of literature out there about how many trillions of dollars are going to be needed in order to achieve these goals, and I know you and I have had some communication before this that, you know, you see that really being tied into the SDGs and the concept of impact. Can you unpack that a little bit for us and just explain also the influence that the world of impact investing is having and if it's a growing influence or size and where it's going?

Diane Damskey: Absolutely. The SDGs were actually critical to the increasing focus on impact investing. There was awareness that there's so much need in the world, and the SDGs crystallized that, and they tried to attach a number to it and have the goal of 2030, and the number is so huge that it was so obvious that it couldn't just be public-sector institutions. So the private sector, they got very involved and increasingly involved with impact investing because it was easier to target an intentional impact when you had the SDGs as an outline, and the SDGs are fairly all-encompassing. It would be very difficult to have an impact investment that couldn't relate in some form to one of the SDGs, and increasingly, impact investors are actually tagging an SDG saying, "Okay. This investment is going to target SDGs seven, nine, 13." So it's actually helped crystallize the market better and better define or help investors better define what they're actually trying to do with their impact investments. On the other side, impact investing, given how large these goals are, impact investing is really critical to being able to meet the SDGs, not in and of itself. Impact investing alone can't do it. There's got to be all types of good investing, even ESG-aligned investing, but impact investing is a big piece of the world being able to meet the sustainable development goals.

Michael Torrance: So you draw distinctions there between impact investing and other types of ESG integration. We see statistics from the Principles for Responsible Investing that the size of quote-unquote responsible investing is in the 10s of trillions of dollars in terms of assets under management that have signed onto those Principles, but presumably, impact investing is a smaller sliver of that. Do you have a sense of how big impact investing is and any kind of growth projections you're aware of?

Diane Damskey: That's the ultimate question. There are all sorts of figures that are thrown out there. It's anywhere from 500 to 800 billion is what is estimated currently, and that is such a small percentage of the overall global assets under management. So one would think that as this becomes a more mainstream way of investing that those numbers could double, triple, quadruple, and they'd still be a small portion of the overall assets under management, but just that jump from 1 to 2 to 3 trillion would be tremendous and would be a tremendous impact for the SDGs. We do see a lot of growth coming, and having the principles and having a framework and better discipline and transparency on what really constitutes impact investing is going to help the market grow because if you don't have a benchmark or definition, anybody can say, "Oh, I'm an impact investor," and it stops to have any meaning because at one point, ESG, impact, sustainability, <Indistinct> everything was just kind of melting together. So investors had no idea how to distinguish between the different types of good investing, and they're all good. There's not one that's better than another. They're just different. So having a distinction actually helps mobilize capital even more because you can be very specific about what you're trying to do, and your investor base will understand better what you're trying to do.

Michael Torrance: You've talked about this fear of green wash, and part of the challenge really for all responsible investment in a lot of aspects of sustainability is that there's really no central authority or regulation that's clearly defining it, so it's really up to the market to define, and so green wash poses this problem for the market of essentially, it's a question of trust, really, about, you want to be able to trust that what is said is being done is actually being done.

Diane Damskey: Mm-hmm.

Michael Torrance: Is that the motivation for signatories to be signing up to the Impact Principles, and what other types of goals? You've touched on this already, but what other kinds of goals and objectives do the Principles have?

Diane Damskey: Yes. One of the main incentives was to avoid the potential for impact washing. It was starting to occur, and traditional impact investors were very wary of this because, for example, a multilateral development bank that impact is all that they do, if impact stops meaning what it should mean, then they've lost the significance of impact. So it was very important for the multilateral development banks and development finance institutions to stand up and say, "This is the standard. This is what we do. This is what impact means." So that was one of the motivations for the public sector institutions to step up because it's what they do anyway, but they realized if they don't stand up and say, "This is the standard that needs to be applied no matter what type of investor you are," they realize that impact washing was going to be more common. Now having the transparency that the Principles demand because each signatory must disclose on an annual basis how their impact management system allows them to align with the principles, that kind of transparency and self-disclosure doesn't really exist in any other principle or framework. So we decided that it was very important to have this disclosure, and it is not aspirational. You must actually align with all of the principles, and the verification requires that some independent party affirm that you in fact are able to do what you say you do. So those two pieces were critical to reducing the potential for impact washing. Why did asset managers sign on? Many of them realized that the demand, they were getting increasing demand from their investors to have more investments available that offer impact alongside financial returns. This is for them to stand up and show their investors, "We're going to adhere to this global standard for impact investors for our investments that are targeting impact." So they felt one, it would help them with their investor base. When you say you're a signatory to the Principles, it now means something, and the level of conversation that investors and investees are having, it's a much higher level now because they understand that there is a framework out there, and there is some kind of comparison that you can make. Relative to the Principles, how do you manage your impact investments? Asset owners on the other hand are standing up because they have the capital. They're investing, and they want to be the leaders in how the impact investing market moves forward and how it develops. So it was critical for them to be a part of the principles because they want to make sure that their capital is going to be deployed in a more standardized fashion that's transparent.

Michael Torrance: So what's the motivation then for these asset owners and managers to do impact investing? There's no compulsion for them to do it. Why? What's their motivation? I know you've done a lot of engagement with signatories or potential signatories. What can you tell us about that thinking?

Diane Damskey: There is growing demand for impact investments. So I think by and large, there is more capital that is demanding to flow towards impact investing, so that is the prime motivation. If there wasn't any capital moving in that direction, it would be very hard for asset owners to deploy their capital in that way or for asset managers to create more funds or strategies that are targeting impact. That is where the capital is moving. You're also seeing major asset managers stand up and say, "We need to be more active and really focus on sustainable investing." So sustainable investing, ESG focus and the SDGs have helped mobilize that capital for impact. In addition to COVID, I must say that everything that's going on with the COVID-19 crisis, there is an even greater focus on the need for impact investing to help rebuild economies that have been devastated by this pandemic. So when we're on these conferences and conference calls and webinars, we're hearing even greater interest in impact investing because the need is even greater in 2020.

Michael Torrance: Can you take us through what the Principles actually require? I know the first two Principles are focused on the strategic intent of impact funds. What does that mean, and what are they trying to get at?

Diane Damskey: That's all about the intentionality. So it's stating that it can be the theory of change, but it is about what is the intention for your impact investment. So it could be more than one, but you have to state outright what you are targeting, what intentional impact you are targeting, and it's also at the portfolio level. Just as a fund has different investments and not all have the same financial returns, it's the same thing with an impact portfolio. They might have different levels of impact. So you're managing at a portfolio level the different investments because what you're going to report is at the portfolio level for the Principles and not at each individual investment.

Michael Torrance: Now what about Principles three through nine? What's the mechanics behind that and what the expectations are?

Diane Damskey: Three through six is really about the structuring of the investment and the monitoring. So that contribution is three. Its like, how does your capital make a difference for the impact that's going to be achieved? Four, five and six are all about being able to monitor the progress of the impact throughout the investment. Principle five is the, for want of better words, ESG principle. That is, you need to be able to monitor for the potential negative effects of the investment throughout the life of the investment. So that's really the investment period, principles three through six. Principle seven is about exits, which that's confusing to some people because exits are usually associated with private equities, but there's a footnote, an explanatory footnote. It's about how you end an investment. It could be that a bond matures or a loan matures. Well, you're not really exiting. It's just a natural ending to an investment, but it's, do you take into consideration that at the end of your investment how the impact would be able to be sustained? And this is a challenge for even long-term impact investors because once you sell a company in a portfolio, for example, how do you ensure that the impact that you had intended and achieved will continue on when you no longer hold that investment? So it's a difficult principle to be certain about, how it is one, two, three generations hence, but it also takes into account the systemic impact. Can you think about and maybe quantify later on what was the actual systemic impact of the investment? Principle eight is really about, what lessons have you learned from the investment, the good, the bad, the challenges, and what would you do differently. How would you improve your impact management systems or how would you measure the impact? And that's all about the loop, what you learned from each of your investments. So that's Principles one through eight. Principle nine, which I briefly mentioned earlier, is about the independent verification, and it was really ... We felt that this was the most critical of all the Principles because as in other principles that have been released, anyone could sign and say, "Yes. I'm doing it. I'm following it." So it was all about self-declaration, but there was no verification, and given the risk of impact washing, the independent verification was considered critical saying, “Great. You can disclose and be transparent about your systems and how they allow you to align with each of the principles, but there must be some independent verifier who is going to affirm that you in fact are doing what you say you do," and by "independent," it does not have to be external. Many are using an external verifier, Audit Company, a consultant. Because we wrote the Principles to be all-inclusive, any size of type of fund, we know that external verifiers can be costly, and we did not want to make this a resource constraint for some of the smaller funds that have signed on. So some of them have gotten very creative, and they're either doing it internally, or they're creating their own independent committee based on their LPs or other qualified persons to be their own independent verifiers. We didn't want to make it or mandate it had to be done a certain way because we knew that impact is challenging for everyone. It's expensive to build the systems. You have to have a measurement methodology, and the independent verification was just one more cost that would have been prohibitive for some of the smaller signatories, but it is really the most critical principle.

Michael Torrance: So when were the principles launched, and what has happened since they've been launched?

Diane Damskey: They were launched on April 12th, 2019, and we had 58 initial signatories. We had a very celebratory event in the World Bank atrium, and that was just the beginning, and since then, once they were launched, there were fewer questions about, well, how do they compare to PRI, the Green Bond Principles or ESG? That seemed to allow people to understand what the Principles were all about. Then it was just momentum and getting the word out in a much broader scale because since we're a very small team that were developing the principles, we did have outreach, but it wasn't as broad as we would have liked. We didn't get to all corners of the earth, and since then, we're having roundtables in Asia, Australia, South America, and we're going to have one, as you know, in Canada this week. That's been very helpful in getting the word out on a broader basis, but now I get as many incoming inquiries about the Principles from organizations that I had not reached out to as I am following up on organizations that I had spoken to last year or earlier this year. The word has gotten out about the Principles. There's a greater understanding of what they are, what they mean, why they matter. There's a lot of momentum behind it. Right now, we have 96 signatories, and we should shortly reach 100, which will be a nice centennial event for the Principles.

Michael Torrance: Well, congratulations in advance for that milestone. That will be a big accomplishment. You've touched on this already, but I'm just curious. As a sustainability professional, I am wary of new standards. There's quite a proliferation of standards and expectations and frameworks, and it can be quite overwhelming, especially for companies that are maybe smaller, don't have the resources to devote to a full sustainability program. How do you see the Impact Principles relating to other existing standards? Is it complementary? Are there competing standards in this space? I'm thinking of ones you've mentioned already, like the PRI, the Green Bond Principles and those other impact principles IMP and GIIN.

Diane Damskey: They're actually all complementary. I would say most signatories are already signatories to the PRI because that is really about responsible investing and ESG. That's the core of the PRI, and because ESG is the foundation for impact, it was fairly natural for impact investors to first sign PRI and then also sign the Impact Principles. They are complementary. They are not mutually exclusive. There are some signatories to the Principles that are not signatories to the PRI. There is a cost to be considered. So they wanted to select what is the most relevant for their business and their investors. As far as the Impact Management Project, it's actually incorporated into the Principles. It's part of Principle three, and the GIIN has very much focused on IRIS and IRIS, which is measurement methodologies and impact metrics, and IFC has worked very closely with IMP and the GIIN, and there is the IMP peer-to-peer structured network, which involves also PRIs in that UNDP and several other organizations because they do want to discuss all of the initiatives that are ongoing to ensure that there's complementarity and when they can work together. For example, IFC and other multilateral development banks and DFIs are working with the IMP and the GIIN on establishing a core set of metrics that can be used globally by both public and private-sector institutions. So it will be thematic, but they're working on that because there is not 100 percent agreement on impact metrics, but they want to create some small subset of impact metrics that everyone will use. So there is a lot of collaboration amongst all of these organizations to ensure that there is not overlap and is complementary, but unless you're involved in it on a daily basis or very closely, it still can be confusing. So we do spend a lot of time kind of delineating what is the difference between all of these different and very worthy impact initiatives.

Michael Torrance: So where do you see this going then, Diane, other than just getting more signatories? How do you expect the Principles to evolve, and where is it going to head in the next few years?

Diane Damskey: One of the unforeseen benefits for the Principles or of the Principles has been that since the launch and as the number of signatories has grown, there's a community of practice that has actually developed. So these signatories are collaborating actively with each other through workshops that we host, through webinars and conference calls that we host, but they are very keen on being the leaders of determining what the future of impact investing is. How do the Principles evolve? The Principles in effect are owned by the signatories, and they will determine how they evolve, if there's modifications needed, how they should be modified. It's really up to them, and they're owning it. They are very active signatories. They're not passively just signing and saying, "Great," and, "I'll see you next year at a conference." They actually are very interested on keeping the discipline in impact investing and rigor around disclosure verifications. So how I see it developing is, I do believe that they will want to see more harmonization as time goes on about what a disclosure should include, how a verification should be presented so that there is much more uniformity and harmonization amongst impact investors. So they will not be able to speak one language given all the different types of organizations that are impact investors, but it will be not French versus Russian. It will be a language that everybody understands, and when you say you're a signatory to the Principles, it means something, and it means the same thing to everybody who hears those words.

The goal is to have more transparency, discipline, harmonization so that impact investing, people don't have to ask, "What is it?" It's quite understood what it is, how it develops, as it grows. It's a new market, just like emerging markets. When I did emerging markets and I was lending the money that then got restructured that then became bonds and now it's a huge market, we had no idea it was going to become that. In the same way, impact investing could evolve in ways that we don't anticipate today, but this framework will help it develop in a much more disciplined fashion.

Michael Torrance: You said that is signatory-led, so what's the governance structure going to be that allows for signatories to play a role in shaping how the Principles evolve?

Diane Damskey: There's an advisory board, first and foremost, which provides advice to the Secretariat, and also, it's kind of the leadership structure for the Principles. So the initial advisory board was elected for 2 years, so that will end next June. Some of them may stay on. Some of them may not, but then, the signatories always have the opportunity to be part of this advisory board, but beyond that, the webinars and conference calls, and we've had now three signatory workshops, the last one was virtual, where all the signatories are able to come together, and they are not shy. They talk about what the challenges are, where they see gaps, what they think needs to be done, where they'd like to see the Principles head. So they are the ones who are proposing, where do we want to go, and what direction do we want to go? IFC is still taking a very active role. Once we have this first set of disclosure statements and verification reports, they are going to do a paper on comparing and contrasting, what are the gaps? What are the challenges? What changes might be needed? So there's going to be a constant review, an assessment of what the Principles mean and how they are being presented and how they are developing. So they're brand-new, so there are obviously going to be a few changes that are needed or modifications or clarifications, and that's why the signatories and their voices are always heard, and they contact me directly and say, "I'm concerned about this," or, "Have you heard about that?" And they're great at helping lead the charge for where the Principles go, so that's how the signatories, they always have a voice. They can always reach out to me or the advisory board, and there are also the ambassadors for the Principles. They are out there speaking about the Principles, encouraging other organizations to become signatories, and they will also be very vigilant about looking at the disclosure statements and making sure that they seem to be robust and that we're moving in the right direction.

Michael Torrance: Do you see this ever being a standard against which you'd get certification?

Diane Damskey: It wasn't envisioned in the original Principles. If the signatories want to go that direction, I mean, the verification is a sort of certification, but since there's no one standard verification, it's not the same thing. I'm not sure. I know there are other certifications that are in the works that might complement the Principles, but right now, it's all about self-disclosure and transparency. If at some point it's deemed that they want it to be more formal, the signatories, they could develop it in that direction. I don't think that's going to happen anytime soon because no one is really looking for it. It's tough enough to actually provide the disclosure statements because to put in writing what you may have been doing for years has been a challenge to even the most long-standing impact investors. They find it an incredibly educational and beneficial exercise. So that in and of itself is quite a lot of discipline.

Michael Torrance: So just as one final question, Diane, what are your hopes for impact investing?

Diane Damskey: My hopes for impact investing are that it does attract more capital and disciplined capital. It will start to incorporate even more publicly traded security strategies. Publicly traded equity strategies are not a huge representation amongst the signatories because it is challenging to demonstrate intentionality and why your capital makes a difference when you're buying secondary market shares, but that is where the bulk of capital resides. So I think my goal would be to see it really encompass all asset classes in a greater way but maintaining the discipline that was initially established by the Principles.

Michael Torrance: Thank you very much for your time, Diane.

Diane Damskey: My pleasure, Michael. It was great to speak with you, and I look forward to working with BMO in the future as a signatory.

Michael Torrance: Thanks for listening to "Sustainability Leaders." This podcast is presented by BMO Financial Group. To access all the resources we discussed in today's episode and to see our other podcasts, visit us at BMO.com/SustainabilityLeaders. You can listen and subscribe free to our show on Apple Podcasts or your favorite podcast provider, and we'll greatly appreciate a rating and review and any feedback that you might have. Our show and resources are produced with support from BMO's marketing team and Puddle Creative. Until next time, I'm Michael Torrance. Have a great week.

Disclaimer: The views expressed here are those of the participants and not those of Bank of Montreal, its affiliates or subsidiaries. This is not intended to serve as a complete analysis of every material fact regarding any company, industry, strategy or security. This presentation may contain forward-looking statements. Investors are cautioned not to place undue reliance on such statements, as actual results could vary. This presentation is for general information purposes only and does not constitute investment, legal or tax advice and is not intended as an endorsement of any specific investment product or service. Individual investors should consult with an investment, tax and/or legal professional about their personal situation. Past performance is not indicative of future results.

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Michael Torrance Chief Sustainability Officer



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