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Peter Burgess
Our reach; your opportunity What's hot? Who's hip? What's hit? Network Meet... The impact evaluators
Meet … the sustainable investment impact evaluators
Sustainable investors are increasingly being asked to measure and report on their 'real-world' social and environmental impact. In this interview, we 'meet' two of the firms that provide impact measurement services to asset managers and two of the users of these services. We also meet two organisations that independently measure the impact of funds in the areas of energy transition and gender equality – as a reminder to asset managers that their impact will be measured … whether they like it or not ;-)
By highlighting a number of differentiated services, we hope to enable asset managers (who will be expected to report on their impact in 2019) to see who’s who and what’s what in sustainable impact measurement.
Below, we meet: Arleta Majoch @ Impact-Cubed, Matt Patsky @ Trillium Asset Management, Gabe Rissman @ Real Impact Tracker, Ben Yeoh @ RBC Global Asset Management, Andrew Behar @ As You Sow, Tony Altmann @ Canetic Advisors.
Read full interview here
Impact evaluator 1: Arleta Majoch, Impact Cubed
Meet … Arleta Majoch @ Impact-Cubed
How do you measure the sustainability impact of investors and funds? What are the distinguishing characteristics of your approach?
We measure the active exposure of any basket of securities (usually a fund or total portfolio, including long/short strategies, fund of funds, etc.) against a benchmark, across 14 factors, all of them well-established and intuitive measures of sustainability and impact.
By combining data on environmental externalities, governance, society, and SDG alignment, we capture a holistic view of a portfolio where each measure can produce a negative as well as positive result.
We’re kidding ourselves if we think measuring only the positive SDG alignment of products and services paints an accurate picture of a portfolio's impact. By owning an issuer’s equity or debt, you own impacts across the board:
- the good and the bad,
- the product and also the operational side.
That’s what the Impact-Cubed model quantifies, with unlimited coverage of public assets across all market caps and geographies, and maximum objectivity and transparency.
Asset manager experience 1: Matt Patsky, Trillium
Meet … Matt Patsky @ Trillium Asset Management
How was your experience of using Impact-Cubed’s approach to measuring the sustainability impact of your investments?
With the mainstreaming of impact investing, we have seen the accelerating pace of new offerings of investment strategies stating they incorporate ESG information and are looking to address the United Nations Sustainable Development Goals (SDGs).
Having sought positive social and environmental impact in our portfolios dating back to our founding in 1982, we found that Trillium Asset Management’s strategies fit well within the SDG framework.
What was missing was a way of separating the “wheat from the chaff” and helping clients differentiate between:
- marketing spin and
- true attempts to address the SDGs.
Impact evaluator 2: Gabe Rissman, Real Impact Tracker
Meet … Gabe Rissman @ Real Impact Tracker
How do you measure the sustainability impact of investors and funds? What are the distinguishing characteristics of your approach?
Real Impact Tracker evaluates ESG strategy and intentionality and it includes an assessment of shareholder engagement intensity and the increasingly important area of public awareness raising.
We certify financial institutions to a high bar minimum threshold of impact, based on our academically rigorous methodology, which we are open-sourcing. We also perform gap analysis on strategy and culture, which guide strategic institutional improvement.
Funds are penalized for underperforming financially as this adds evidence to assumptions that there is a financial penalty for sustainability considerations.
Measures which evaluate impact using only weighted-average holdings calculations leave funds such as RBC Global Equity with less than full marks. Ratings need to consider the impact of strategy and our approach does this
Asset manager experience 2: Ben Yeoh, RBC Global Asset Management
Meet … Ben Yeoh @ RBC Global Asset Management
How was your experience of using Real Impact Tracker’s approach to measuring the sustainability impact of your investments?
Our team wanted to know how we compared to leading peers. We have the highest ESG rating from a global investment consultant, but that consultant forms no view on ‘impact’ and offers us no insights on how we compare with others.
So, it was useful to have our purpose, philosophy and stewardship activities assessed. The scores that Real Impact Tracker gave us on our culture and our views on public policy and civic society developments offered insights that are not available elsewhere.
Culture is seldom assessed. However, we view it as important. So, the insights delivered on this measure have gone into our process improvement work.
It was also thought-provoking to have a conversation around a more holistic view on what ’impact‘ means in a public equities process.
Working with RIT helped us better understand our own ESG process, culture and impact in a way that we couldn’t gain from elsewhere. RIT highlighted our strengths as well as areas to improve. The dialogue that came out of this was valuable.
Impact evaluator 3: Andrew Behar, As You Sow
Meet … Andrew Behar @ As You Sow
How does Gender Equality Funds measure the sustainability impact of investors and funds? What are the distinguishing characteristics of your approach? Gender Equality Funds is a free, online tool enabling individual and institutional investors to apply a gender lens to mutual funds and ETFs. It screens the holdings of ~5,000 of the most commonly-held U.S. mutual funds against a database detailing company performance on 12 gender equality performance indicators.
These indicators measure policies that demonstrate a commitment to gender diversity and gender balance in the overall leadership, management, and workforce of companies. Company scores are aggregated into a portfolio score for each fund.
This transparency gives investors, for the first time, the ability to apply a gender lens in evaluating mutual funds. It also empowers companies to add gender-smart investing options to their 401(k) plans and encourages fund managers to construct and offer investment vehicles optimizing gender parity, exerting market pressure on companies to improve their gender performance.
Impact evaluator 4: Tony Altmann, Canetic Advisors
Meet … Tony Altmann @ Canetic Advisors
How does Clean Impact Rankings measure the sustainability impact of investors and funds? What are the distinguishing characteristics of your approach?
Our Clean Impact Rankings focus on one indicator—is a fund investing in the pure-play renewables and cleantech companies most likely to deliver maximum carbon abatement ROI. We draw on Canetic’s proprietary models and algorithms to identify companies with the highest 10 year projected CO2 abatement per dollar invested. Our analysis leverages Canetic’s global database of emissions factors, proprietary value chain weighting system, and industry opinions on future efficiency gains to define key operating dimensions that drive CO2 abatement as well as financial performance ----the intersection of impact and alpha.
Our rankings are forward-looking, They focus on fund investments in companies directly delivering climate impact, and leverage financial, operational and climate models with rigorous performance evaluations across renewables, cleantech. Lastly, industry insights from seasoned operators with renewables and cleantech experience in are the foundation for our assessments.
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