Tideline is a consultancy that’s worked with some of the industry’s pioneering investors, and they’ve now released a guide that helps sustainable investors define where they sit on the spectrum, and whether they fit the impact investor label.
The report is a response to a lack of universal standards for product and fund labeling, and aims to offer a framework for investors to assess their own approach, and consider where they fit on the spectrum of sustainable investing.
“A growing number of asset managers are unsure of what it means to claim the ‘impact’ label, and are uncertain of what such a label may communicate to investors and other external stakeholders,” Ben Thornley says, Managing Partner at Tideline.
“In the absence of universal standards for product and fund labeling, we believe accurate self-classification backed up by robust evidence and independent verification is a critical part of any sustainable investment journey and essential to growing the sustainable investing space with integrity.”
The framework defines three core pillars that are foundational to an investor’s impact practice, going above and beyond financial factors:
Intentionality – Explicitly targeting specific social or environmental outcomes;
Contribution – Playing a differentiated role to enhance the achievement of the targeted social or environmental outcomes;
Measurement – Monitoring and reporting impact performance based on measurable inputs, outputs and outcomes.
The key nunce of the framework is the recognition that many investors, wherever they sit on the sustainable investment spectrum, will have these characteristics to a certain degree. But it’s the level of concentration of the factors, their intensity and degree of emphasis, that will differentiate approaches such as: ESG integration, thematic investing, and of course impact investing.
The framework references the pioneering work of existing standard-setters, and aims to make them even more widely adopted. It references work by the Global Impact Investor Network (GIIN) to develop an ‘Impact Classification System’, as well as the ABC (Avoid, Benefit, Contribute) system from the Impact Management Practice (IMP), all of which had input from Tideline, and which helped the industry progress and to engage with ever-more investors.
The Tideline model strives to simplify the language, and to clearly define the various models of sustainable investing.
In more practical terms, the report finished with three case-studies that offer examples of how Tideline reviewed and categorised the specific manager’s approach. While it did illustrate the complexity of comparing an emerging markets public equities manager, with a property investor focussed on healthcare property and social housing, but more importantly, it offered a very tangible framework for how sustainable investors can compare and contrast their own approach and better define their impact status.