Challenging our finance-led theory of change
April 2024
The table below reproduces Figure 6 of Seeking Impact: Using theories of change to assess and guide corporate climate action, from the Centre for Climate Engagement at Hughes Hall, University of Cambridge and Zero Ideas.
Copyright © 2024 Hughes Hall, University of Cambridge
What we would expect to see and what we do see in a finance-led theory of change
Do banks drive companies to act?
What we would expect to see
What we see in practice (click for source)
Bank engagement influences corporate target-setting
Companies with poor transition performance experience divestment and increased cost of capital
Do asset managers drive companies to act?
What we would expect to see
What we see in practice (click for source)
Companies achieving higher ESG scores outperform in ESG impact
Asset managers use their influence to demand and support climate action by companies
Engagement by asset managers drives changes in companies’ activities and/or follow-through by asset managers
Do asset owners drive asset managers to act?
What we would expect to see
What we see in practice (click for source)
ESG funds deliver sustainably competitive financial performance; or owners are prepared to compromise financial returns, at least at the margins
Impact-concerned ESG investing has a sufficient share of assets under management (AUM) to drive what asset managers do