Rathbones Ethical Bond fund manager Bryn Jones offered an investment example: “The fund includes both negative and positive screening. Both can help to add performance while delivering a social return. The fund recently invested in the Media Development Investment Fund (MDIF), which invests in independent media around the world, providing the news, information and debate that people need to build free and thriving societies.”
Amanda Young of Aberdeen Standard Investments takes a different view explaining that their new UK Equity Impact Employment Opportunities fund only lists positive criteria: “Our impact strategy aims to channel mainstream capital into companies whose intentional purpose and strategy focus on providing products, services and behaviours that help solve the world’s key problems. This approach naturally avoids those companies whose business activities harm society.”
In addition to investment selection there is also the area of investor stewardship which many would argue is equally impactful. Dominic Burke of Sarasin and Partners offers a flavour of this with regard to their new Climate Active Charities fund: “It also means engaging to ensure that the companies we invest in commit credibly to modifying their strategy in order to protect and enhance capital, and improving market-wide climate risk disclosure by engaging with auditors who are signing off the financial accounts of oil and gas companies,” he said.
Putting these strategies into a wider context, Adam Robbins of impact stalwarts Triodos explained how they look at this area: “Our six impact strategies range from energy and climate, inclusive finance, sustainable food and agriculture to sustainable real estate and socially responsible investments. All are key in the transition to a world that is fairer, more sustainable and humane.”
Other notable developments include EdenTree’s carbon footprint measurement work and the WHEB Sustainability fund’s impact calculator both of which can be viewed online.
Discretionary fund managers and portfolio planners are also increasingly involved. Castlefield, Tribe Impact and EQ Investors are three good examples. EQ’s Damian Lardoux said: “For us, fund managers should focus on the net impact companies are making primarily through their products and services and then at a second stage through their operations. The concept of additionality should also be at the forefront of their process to make sure that fund managers are supporting those companies without whom the positive impact would not have happened. Finally, while still challenging, impact fund managers should intend to measure the impact they are achieving as it pushes them to consistently reassess the suitability of each stock within their portfolio.”
My view is that although the process of assessing and articulating positive impacts is still evolving, the effort that is now focused on progressing this area is most welcome. Although some in the area perhaps rightly fear impact wash there is little doubt that the buzz that surrounds it is good news.
