Vlessing, Zachary M
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Publication Sustainable Development in Lithuania: An Emerging Market Case Study(2021-10-15) Vlessing, Zachary MIn June 2021, a group of researchers from ESG analytics firm Impact Cubed published research that analyzed country level progress in achieving the United Nations Sustainable Development Goals (SDGs). These goals form the international standard on 21st century development, advancing economic, social, environmental, and democratic values. Utilizing a pathway analysis to track a country's trajectory in achieving the goals, this groundbreaking study found that Lithuania has the strongest pathway towards Sustainable Development in the world. To understand both what has driven this progress and what can be done to further capitalize on their success, field research was conducted in Lithuania with first-hand accounts from Lithuanian leaders. Representatives from government ministries, impact-oriented businesses, non-governmental organizations, and national publications all contributed to these findings. DRIVERS OF PROGRESS 8 key drivers are identified as contributing to Lithuania’s position as a leader in SDG progress. These insights can be broken down into 3 main categories: Geographical Position, Political Situation, and Progressive Business Ecosystem Geographical Position Resource Rich - Lithuanian large forests and fresh water sources provide climate benefits and minimize the risk of over exploitation Nordic Influence - Sweden, Norway, Finland, and Denmark are bringing influence and investment that are shaping Lithuanian practices in their image Energy Independence from Russia - New connection to European power grids have made Lithuanian energy more sustainable and affordable Political Situation European Union Support-Green New Deal and Sustainability Reporting from the EU is rapidly affecting how politicians and businesses view the climate crisis Domestic Political Support - Policies targeting various SDGs such as plastic waste, alcoholism, and forest coverage have proved to be effective in developing a more progressive society Progressive Business Ecosystem Emergence of Corporate Sustainability-Increased consumer demand for impact-oriented products is shifting companies towards maximizing social impact as well as profit Growing Entrepreneurial Hub - Favorable business regulation is causing foreign nationals to return home and attracting top talent to develop new ideas Rise of Impact Financing-Success of Green Bonds is raising significant capital for green energy and infrastructure RECOMMENDATIONS To capitalize on the promising progress achieved to date, 3 primary recommendations emerge: Move Sustainable Development to the Prime Minister’s Office - Current ownership of the SDGs within the Ministry of Environment is unable to tackle the full scope of the SDGs, which run across ministries Revitalize the SDG Expert Network - Engagement from the Expert Network is crucial to build partnerships and encourage lawmakers to pursue policies that achieve the SDGs Develop Institute of Sustainable Finance - Creation of an Institute would make Lithuania a regional leader in facilitating investment into projects related to sustainability and social developmentPublication A Model for Public Market Impact Investing: Measuring Corporate ESG Intentionality(2022-01-01) Vlessing, Zachary MThe Global Impact Investing Network (GIIN) lists intentionality as one of its four core characteristics of impact investing. It defines intentionality as an impact investor “intentional desire to contribute to measurable social or environmental benefit”.[1] Most importantly, it uses this core attribute of intentionality to differentiate true impact investing from ESG (Environmental, Social, Governance) investing strategies which it says only incorporates “impact considerations”. This research paper rebuts the assertion that impact intentionality and ESG are mutually exclusive and proposes a solution for impact investing using ESG data. By surfacing companies who have shown dramatic improvement in their cumulative ESG score, investors are now able to isolate quantitatively the intentional actions undergone by companies to improve the positive societal impacts of their business. This paper puts forth a methodology on how to measure this Corporate ESG Intentionality and compares the incremental ESG performance of an intentionality portfolio against an alternative ESG portfolio and the US Equity benchmark. The findings show that an ESG intentionality portfolio has a higher correlation between data providers than their overall score universes. This confirms that rating providers agree more on intentionality level improvements than overall scores, minimizing individual rater biases. It also finds an intentionality sample to outperform on impact measures such as GHG emissions per $1M revenue and gender diversity compared to the benchmark and US industry. Lastly, a Scope 1 and 2 emissions model found just 91 companies showing GHG intentionality accounted for 87% of the total GHG reduction in the Russel 3000 universe over a 4 year period. This paper sets the stage for a needed addition to the use cases of ESG data for investors to show impact intentionality: by measuring a corporation’s intention and resulting action to improve their non-financial impact on society through ESG data. Section 1 will analyze the background and current uses of ESG data. Section 2 will discuss the concepts of intentionality and additionality in bringing ESG to the impact investing space. Section 3 will discuss a proposed intentionality measurement methodology and highlight the findings. Section 4 will conclude and summarize the findings.