Another key requirement of impact investing concerns proving that the impact of the investment decision, is "additional" (i.e. wouldn't have otherwise occurred). Unlike private equity or project financing, it is much harder to determine the additional impact of investments in public equity as the ownership stake is small and not directly linked to a company's financing.
One approach to counter this is to develop strategic engagement arrangements with companies around sustainability. For example, we can reach out to companies in our impact strategy to achieve two outcomes: i) to minimize ESG risks (negative impact); and ii) to maximize positive impact. We encourage companies to improve disclosure on the impact of their products in order to shape a corporate strategy that would maximize impact in alignment with relevant SDGs. By designing a strategic engagement strategy aligned with the investment goals, we can demonstrate impact and thereby the additionality of the investment in public equities.
Annual engagement cycle