Sustainable investing exceeds US$30 trillion in assets under management, yet impact investing represents just 5% of such investments: Prof. Keiko Honda at Exim Bank’s 37th Commencement Day Annual Lecture

Professor Keiko Honda, Professor at the Waseda Business School, Waseda University, delivered the Exim Bank’s 37th Commencement Day Annual Lecture in Mumbai on April 15, 2026. She spoke on the topic, “Sustainable Investing: Where It Is Coming From and Where It Is Going”. Prof. Honda is the former Chief Executive Officer of the Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group, where she led initiatives to promote foreign direct investment in emerging markets.

In her lecture, Prof. Honda traced the history of sustainable and ESG investing from its origins and noted that it is currently at an inflection point. She articulated the differences between ESG investing, sustainable investing and impact investing, along with other related approaches such as philanthropy, socially responsible investing, and responsible investing.

Prof. Honda noted that ESG investing integrates non-financial factors into investment decisions, with the objective of achieving higher long-term returns. Impact investments, on the other hand, aim to generate positive social and environmental impact alongside financial returns. Prof. Honda highlighted that nearly 65% of impact investors expected market-rate return, as per research by the Global Impact Investing Network. She also noted that while the scale of ESG and sustainable investment is significant, at nearly US$ 30 trillion, the scale of impact investing remains smaller at nearly US$ 1.6 trillion, representing about 5% of ESG/ sustainable investing.

Prof. Honda also elucidated some of the motives for ESG investing. She noted that the primary objective of the majority of ESG investors is to achieve higher financial returns. She noted that for many institutional investors, ESG is not primarily about values or impact, but rather serves as a tool to enhance risk-adjusted returns. ESG factors often represent low-probability but high-impact risks, which can significantly alter the risk-return profile of investments over the long term. She highlighted a case study, wherein seven out of nine ESG equity indices outperformed their respective parent equity indices, suggesting a positive relationship between ESG integration and returns.

Prof. Honda also assessed some of the major challenges facing sustainable investing. These include the lack of commonly accepted definitions of sustainable investing, data constraints, complexities in identifying material ESG factors, ambiguity regarding consistent generation of excess returns, and the growing political division on the topic of sustainable investing.

Prof. Honda analysed the evolving global disclosure landscape, the role of international standards, and the divergent approaches across regions, including Europe, Japan and the United States, which have created a fragmented landscape for sustainability disclosure. Prof Honda also highlighted the significant shift in the ESG positioning of major U.S. financial institutions, as a result of rising political pressure, particularly the move away from public climate commitments toward a more cautious strategy known as 'greenhushing’.

Prof. Honda emphasised that, going forward, the approach to sustainable investing should be built on transparency and financial rigour, with a focus on establishing clear return expectations relative to market benchmarks and focusing exclusively on material ESG factors that drive corporate value. She also emphasised the need for robust data disclosure and for maintaining a zero-tolerance policy towards greenwashing, with a view to protecting firms’ reputation while delivering the expected results to the stakeholders.

In here introductory remarks, Ms. Harsha Bangari, Managing Director, Export-Import Bank of India, expressed that the Commencement Day Lecture series which started in 1986, and now in its 37th edition, has been contributing to discussions on contemporary issues impacting global trade, investments and international relations. She highlighted that the lecture by Prof. Honda is both interesting and pertinent, considering the rapid growth in the issuance of green bonds, social bonds, and sustainability-linked instruments globally. She also highlighted Exim Bank’s strong focus on sustainability amid the evolving global dynamics.

Shri M. Nagaraju, Secretary, Department of Financial Services, Government of India, in his special address, highlighted that mobilising sustainable finance from both public and private sector is central for India to meet its net-zero target by 2070. He noted that India requires nearly US$ 22.7 trillion worth of cumulative investments for achieving the net-zero target. He also highlighted initiatives undertaken by the Government of India and the financial sector to promote green financing and sustainable investments.

Ms. Deepali Agrawal, Deputy Managing Director, Export-Import Bank of India, in her vote of thanks, emphasised that Prof. Honda’s lecture combined historical perspective, analytical rigour, and practical relevance. She also highlighted that Prof. Honda’s assessment of the major challenges for sustainable investing resonated with Exim Bank’s own experience as an issuer of sustainability bonds in international markets.