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‘Impact Investing’: Key Takeaways from the First Episode of FEB’s SF Updates

December 06, 2023

Contributor: Rashid Shabir Abbasi | Editor: Supriyono

DEPOK, UIII.AC.ID - The Department of Masters in Sustainable Finance at the Faculty of Economics and Business at the йPվ Indonesia (UIII) achieved a significant milestone by successfully conducting the first episode of ‘SF Updates’—a series of events where experts in sustainable finance share their insights on the latest developments in this ever-changing field.

Unfolded on November 30, 2023, the debut in ‘SF Updates’ featured Dr. Ubaudillah Nugraha, Independent Board of Commissioner at PT. Asuransi BRI Life and lecturer at Binus Business School, Binus University. He enhanced the students’ understanding of “Impact Investing”, a form of investing that aims not only to generate positive social and environmental outcomes but also healthy financial returns for investors.

Dr. Nugraha commenced his talk with a discussion of history, trajectory and the terminology involved in sustainable finance. He mentioned that the concept of sustainability is not new; it has existed since the early 1800s when philanthropy was a practice to pay back to society.

He elaborated that the responsibility to avoid ‘sinful investments,’ such as drugs, gambling and prostitution were considered moral and ethical principles of investment. However, in today’s development, sustainability is ingrained into the core of every business.

Dr. Nugraha continued by presenting a couple of scenarios in which students were asked to explain whether the said investments could be classified as Impact Investments or not. Upon generating the students’ answers, he remarked what constitutes impact investing.

“Impact Investing has an ‘impact’ problem. To determine whether an investment meets the requirements of impact investing, it has to generate measurable beneficial, social or environmental impact along with financial gains,” explained Dr. Nugraha.

He also discussed the importance and role of financial markets and institutions in achieving a sustainable future. Financial institutions, such as banks, capital markets, and venture capital control the flow of funds and hence have a significant impact on where money is being invested.

“Currently, 25-30% of the world’s economy is financial sector and financial sector is forecasted to grow approximately 7-8% annually. Therefore, through positive selection of companies or allocation of capital that intentionally deliver products or solutions that contribute to one or more of the UN’s SDG’s, financial institutions can significantly contribute to the implementation of sustainable development goals” Dr. Nugraha elaborated.

Part of the ‘SF Updates’ series, the intriguing session with Dr. Nugraha provided an insightful presentation, in line with the event’s grand objectives, aiming not only to enrich the students’ knowledge and develop their understanding of the role and importance of sustainability in finance but also to provide an opportunity for students to interact with industry leaders through an interactive discussion.