So, what are the five key scores?
- Positive Impact
This score aims to highlight the progress a fund is making towards generating more intentional positive impact. Investing with intentionality focuses on holding investments in companies contributing towards solutions that are meeting some of the world’s greatest challenges. These challenges can be related to the United Nations Sustainable Development Goals (SDGs).
- Active Agent
It is more important to know and understand the asset manager and trust their process as the holdings change. We have extended our analysis so that we now also assess the investor contribution i.e. the impact and sustainable performance of the asset management firm. We assess their commitment and performance to ESG and the impact markets beyond that of their individual fund/s as well as how they influence sustainable practices through their stewardship (e.g. voting and engagement). We assess c.110 asset managers (representing all c.320 funds) across 40 metrics using quantitative and qualitative analysis.
- Avoidance of Harm
We have developed proprietary comprehensive frameworks, drawing on advisory from an external academic, in order to analyse the presence of controversies within a fund’s portfolio and highlight any exposure to harmful sectors and products.
- ESG
This score focuses on operational impact measuring the Environmental, Social and Governance (ESG) practices and opportunities associated with the fund’s underlying holdings, providing insight into the companies’ resilience to long-term, financially-material ESG risks.
- Carbon Risk
For financial advisers it is important to consider the carbon risk to a client’s portfolio. As the current market is not pricing in carbon, significant systematic risk channels are emergent. Within impact investing, it is inherent to think that the carbon scoring would be similar across the board. However, often carbon-efficient portfolios exhibit unintended sector and factor biases so carbon risk scoring can be a useful tool to assess overall portfolio risk.
Most financial planners agree that consistency and comparability of data across funds is essential. We have developed benchmarks for each of the five scores that will illustrate a fund’s relative performance not only against the traditional market but also provide peer benchmarking against the entire impact and sustainable spectrum.
All of this is designed to help you articulate the difference that your client is making with their investment portfolios. We’ve developed visualisation tools so you can show your clients how using funds in the universe will channel a growing proportion of their wealth towards assets that are contribute to solutions meeting some of the world’s greatest challenges as defined by the UN Sustainable Development Goals (SDGs).
Independent analysis of environmental and social impact of investments and helping financial planners eloquently communicate this to their clients is all we do. Our analysis is not supported by asset managers, not licensed for them to use the ratings or limited to any pay to play service; it is paid for by subscriptions from financial planning firms.
We continue to progress and offer advisers market leading insights, utilising the experience across our Worthstone Collegiate network and our 10 years of active leadership in the sector.
If you are a financial planner and your firm construct their own portfolios why not take a closer look at what we offer?
Book a demo of our Impact Portal here today - you need to act now – to show interested clients your business is ready to embrace an approach of growing importance to many investors.
Gavin Francis
Founder and Director
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