SIMC20: Impact now a key factor in Schroders’ investment process

Schroders is focusing on measuring the impact of its investments, attendees at Schroders’ Digital International Media Conference 2020 were told.

Schroders’ Global Investor and Institutional Investor Studies have this year emphasised the growing importance of examining and delivering impact, with more investors now looking to align their personal beliefs with investment outcomes and the expectation that asset managers should focus on active company engagement.

Schroders has developed a platform called impactIQ which enables investors to understand the direct impact their investments are having on society and the environment. Portfolio managers and analysts use the data generated by impactIQ’s tools to interact more closely with companies on how they are managing sustainability challenges.

This encompasses Schroders’ proprietary tools SustainEx, Carbon Value at Risk (VAR) and ThemEx and provides meaningful and clear intelligence about the impact of investments.

SustainEx quantifies the positive and negative impacts companies have on society and the environment, while Carbon VAR measures the impact of rising carbon costs on a company’s profitability.

ThemEx will allow Schroders’ investment teams to map companies’ contributions to the United Nations Sustainable Development Goals (SDGs).

Furthermore, Schroders’ close relationship with BlueOrchard – a leader in impact investing that for nearly 20 years has been creating innovative impact investment solutions aligned to the SDGs – is key to its ambitions to measure impact along a continuum across all its assets in the liquid and the less liquid space.

Carolina Minio-Paluello, Schroders’ Global Head of Product, Solutions & Quant, commented:

“In our journey of integration of ESG over the past few years, the focus had been on understanding ESG risk and opportunities. In the next phase, the focus is in understanding the impact of our investments. Bringing impact as a third dimension alongside risk and returns means we can now link impact to risk: where companies have a negative impact on society, this is increasingly being translated into financial costs which can influence their long-term growth prospects.

“We give customers the information they need to understand the full impact of their investments and the choice to manage their impact.”

Andy Howard, Schroders’ Global Head of Sustainable Investments, commented:

“Active ownership has always been an important part of how we think about our role at Schroders. That focus will be more important than ever as the pressures on companies to adapt to the changes shaping their industries intensify.  We are putting more focus on clarifying what we expect from companies, and ensuring we're holding them to account.”

Maria Teresa Zappia, Chief Impact Officer and Deputy Chief Executive Officer, BlueOrchard, commented:

“For nearly 20 years BlueOrchard’s vision and mission has been focused on reducing poverty and protecting the planet, while providing attractive returns for investors. Measuring impact has been at the core of our activities. As pioneering impact investors we look forward to supporting Schroders on their journey towards integrating impact in their investments.”