A target can focus attention. Its removal can weaken accountability. But a number alone never tells us what changed in the real world.
In June, the World Bank retired its target for 45% of its financing to have climate co-benefits.
The Financial Times has since reported that the Inter-American Development Bank and Asian Development Bank are reviewing their own climate-finance targets.
That does not mean those institutions have stopped financing climate-related work. But when a clear target disappears, it becomes harder for outsiders to judge ambition and progress.
The World Bank says it wants to focus more on results than on the proportion of money allocated. Critics argue that removing the target weakens accountability.
Both arguments point to the same problem: a number can be useful, but it is not the same as a result.
I started my career at the World Bank, so I follow this debate closely. What matters is not only how much money is labelled for a purpose, but what the money is intended to achieve, how progress is assessed and whether the limitations are made clear.
The same principle applies when an investment fund promotes environmental or social characteristics.
Three questions worth asking
- What exactly is being assessed?
Broad labels tell investors very little. Look for the specific environmental or social characteristics considered in the investment process.
- How is it measured and monitored?
Ask what indicators are used, where the information comes from and whether the assessment continues after the investment is made.
- What is not being promised?
Clear communication should explain the limits as well as the ambition. Promoting environmental or social characteristics does not guarantee a financial return or a real-world outcome.
Clear communication should explain the limits as well as the ambition. Promoting environmental or social characteristics does not guarantee a financial return or a real-world outcome.
Our answer at lumiors
At lumiors, these are also the questions behind ROI² - our framework for considering financial criteria alongside the environmental or social characteristics promoted by an underlying fund. Investing involves risks. Returns are not guaranteed.
The process examines the fund’s strategy, financial measures, and measurable indicators before an investment is made, and then as part of subsequent monitoring. The framework creates a consistent way to ask better questions; it does not guarantee financial returns or real-world outcomes.
lumiors is classified under Article 8 of the EU Sustainable Finance Disclosure Regulation because it promotes environmental and social characteristics. It does not have a sustainable investment objective, and neither financial returns nor environmental or social outcomes are guaranteed.
The fund invests indirectly in private equity and is intended for investors with a time horizon of at least ten years. Private equity is high risk and illiquid, and investors may lose some or all of their investment.
Marketing communication. Capital at risk. The investments of the Fund are not liquid. lumiors fund is registered with the Dutch Authority for the Financial Markets as an investment institution managed by Elite Fund Management (AFM Sub-fund ID 50039044). Refer to the prospectus and EID before making an investment decision. Further information: https://lumiors.com/information/.
