To allow you to measure the impact of your portfolio, KPMG and the Cambridge Institue of Sustainability Leadership (CISL) have developed a software-as-a-service (SaaS) tool – the Sustainable Investment Framework Navigator, that can assess investment portfolios based on a common impact standard and provide asset managers and investors with insight into real-world sustainability impacts of investment portfolios.
The ultimate goal of the co-operation between CISL and KPMG is to create a tool by which all investment portfolios can be assessed using a common impact standard so that asset managers and investors can make informed choices with their investments.
We, and our clients, have been waiting for this moment for many years. Measuring the ESG impact of funds just felt like walking through a thick fog. Finally, with this tool, I feel like we’re coming out of the mist and a fresh, clear day is emerging.
Investors, regulators and other stakeholders are becoming increasingly aware of the impact that investment choices have on society, and are increasingly demanding that asset managers intensify their efforts to provide insight into their level of contribution to sustainable development. This results in spectacular growth in environmental, social and governance (ESG) integrated and responsible investment products.
A growing number of asset managers have begun reporting on the impact of their holdings. This commonly includes reporting on impacts associated with their investments, including carbon emissions and jobs created. However, many asset managers have found it difficult and time-consuming to report on the full impact of their investments due to the lack of a standardised methodology and limited availability of reliable data.
The Navigator offers financial institutions and investors a simple and transparent method of understanding their environmental and social impact. There is an ESG data library inside the Navigator provided by an external data provider which covers the data needed for the assessment of more than 10,000 listed companies.
The Navigator can be used for:
This framework clearly demonstrates the ILG's mandate to provide member-driven, solution-based outputs backed by world class academic expertise. In co-developing and piloting the framework, the Group's work will help the market navigate a key sustainable investment challenge: the ability to communicate to investors, social and environmental outcomes from investment portfolios.
The University of Cambridge Institute for Sustainability Leadership (CISL), in conjunction with its Investment Leaders Group (ILG), has developed the Sustainable Investment Framework for assessing portfolios of listed equities or corporate bonds.
Based on data that are available from recognized data providers, the Framework assesses the absolute performance of a fund as well as its relative performance in comparison to a benchmark. It comprises a set of six themes which investors can use as proxies for the performance of their investments against the full suite of United Nations Sustainable Development Goals (SDGs).
CISL’s framework offers a solution to this problem in the form of six simple quantitative tests based on readily available data. Our collaboration with KPMG will help us advance the framework in the future as new data sources become available, including in the important area of social impact.
The Framework provides a quick ‘dashboard’ that enables the asset manager or owner to understand and assess the performance of a fund and compare it to others. The outcome highlights the relative performance of a fund portfolio in comparison to a specified benchmark.
In brief, the six key themes in the Framework look at the following criteria:
The University of Cambridge Institute for Sustainability Leadership (CISL) is a globally influential Institute developing leadership and solutions for a sustainable economy. We believe the economy can be “rewired”, through focused collaboration between business, government and finance institutions, to deliver positive outcomes for people and environment.
For over three decades we have built the leadership capacity and capabilities of individuals and organisations, and created industry-leading collaborations, to catalyse change and accelerate the path to a sustainable economy. Our interdisciplinary research engagement builds the evidence base for practical action.
The Investment Leaders Group (ILG) is a global network of pension funds, insurers and asset managers committed to advancing the practice of responsible investment. It is a voluntary initiative, driven by its members, facilitated by the Cambridge Institute for Sustainability Leadership (CISL), and supported by academics from the University of Cambridge.
The ILG’s vision is an investment chain in which economic, social and environmental sustainability are delivered as an outcome of the investment process as investors go about generating robust, long-term returns.