CT Responsible Global Equity Strategy - Our approach to impact
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CT Responsible Global Equity Strategy – Our approach to impact

Time is running out to halt and reverse the damage that has been inflicted on our environment and societies, and by extension our future economy.

One very effective and powerful way to drive positive change is to mobilise capital with intent and purpose. There is an urgent need for our economic model to evolve and embrace impact as a key input into capital allocation decisions and ultimately, as a key determinant of future investment returns. With the right framework, investments in listed equities can generate real world impact. With this in mind, we have crafted a framework around 4 fundamental building blocks:

Additionality

we make the distinction between the impact generated and delivered by the underlying investment, i.e. by an investee company’s activities, and the impact generated and delivered by ourselves, the investor, primarily through our stewardship activities.

Intentionality

we identify at the outset an environmental or social sustainability challenge that the investment would help to solve.

Materiality

we seek to assess the scale of the investee company’s impact. We take into consideration how important these impact-linked activities are to its own revenues.

Measurability

we assess, measure and track outcomes that are meaningful and contribute to making a real-world impact.

Our framework is underpinned by our Positive Impact Principle, which underlies our twin ambition to deliver attractive financial returns, and positive non-financial outcomes.

Measuring real-world impact

We have selected some examples from companies in the Strategy that report impact-related outputs or outcomes to illustrate the real-world effect of their operations, products or services on the environment or on the lives of stakeholders, such as workers, suppliers and customers.

 

Expectations of companies’ measuring and reporting on the environmental and social impacts of their businesses continue to grow. While significant progress has been made, challenges remain, and we have been engaging with companies in the Strategy to discuss these challenges and offer support in identifying best practice. Currently, companies focus on their own actions as a proxy for impact (e.g. 5,000 new microloans disbursed), rather than diving deeper and using metrics to demonstrate that these actions have had a positive effect (e.g. new microloans improved borrowers’ income by x%).

 

Ideally, we would like companies to consider not just what type of impact they have but also how much – i.e. quantifying where possible the materiality of impact, its scale, depth and duration; who is affected (e.g. marginalised groups, low-income countries); the contribution their actions have beyond what would have happened anyway; and, where they are forecasting future impacts, the risk that these may not materialise as planned.

1.7 billion tonnes

of carbon emissions avoided through 151GW worth of installed wind turbines over the last 4 decades

Vestas Wind Systems

10+ million consumers

reached with affordable microinsurance and microsaving solutions

Allianz

10.3 million households

reached through sustainable livelihood initiative

HDFC Bank

> 31 million people

reached (cumulatively) through Healthy Heart Africa, Young Health Programme and Healthy Lung programmes**

AstraZeneca

20 million people

‘at the base of the global economic pyramid’ given access to clean water and sanitation solutions in 2020

Xylem

347 million tonnes

of CO2 emissions saved and avoided for customers since 2018 (for context, in 2020 UK territorial greenhouse gas emissions were 406 million tonnes).

Schneider Electric

500million

unbanked people brought into the financial system***

Mastercard

$4.6billion

provided in access to capital to small and medium-sized businesses

PayPal

We would like companies to consider not just what type of impact they have but also how much.

Download the full report

Read in-depth engagement case studies and learn how portfolio holdings correspond to the seven sustainability themes including ‘Connect & protect’, ‘Energy transition’ and ‘Resource efficiency’.

 

* as of March 2021, i.e. cumulative
** For 2021 alone the figure is 6.7m
***cumulative, goal of 500m set in 2015 and achieved in April 2020
18 November 2022
Nick Henderson
Nick Henderson
Director, Portfolio Manager
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CT Responsible Global Equity Strategy – Our approach to impact

* as of March 2021, i.e. cumulative
** For 2021 alone the figure is 6.7m
***cumulative, goal of 500m set in 2015 and achieved in April 2020

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For professional investors

For marketing purposes. Your capital is at risk. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. Not all services, products and strategies are offered by all entities of the group. Awards or ratings may not apply to all entities of the group. This material should not be considered as an offer, solicitation, advice, or an investment recommendation. This communication is valid at the date of publication and may be subject to change without notice. Information from external sources is considered reliable but there is no guarantee as to its accuracy or completeness. In the UK: Issued by Threadneedle Asset Management Limited, No. 573204 and/or Columbia Threadneedle Management Limited, No. 517895, both registered in England and Wales and authorised and regulated in the UK by the Financial Conduct Authority.

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