Impact Engagement Framework

In recent years there has been an increasing focus on responsible and impact investing. For this asset class to take on its full meaning, asset owners need to have a clear view of the sustainability and/or environmental/societal impact of the company they are investing in. This in turn requires reliable data for those criteria to be measured.

To date there is no standardised measurement system. The non-financial information about companies is not comparable due to the disparity in reporting requirements from one country to another, varying data tracking approaches, and very different levels of resources for doing so.

At UBP we have developed the Impact Engagement Framework (IEF) a methodology for managing our engagement with the companies we have selected for investment, and for collecting and comparing the data we need for measuring their impact. The IEF covers an extensive range of both top-down and bottom-up, qualitative and quantitative impact criteria.

When running the Framework, we made direct contact with each company we are invested in. While the lead time for obtaining the information requested varied from one day to seven weeks, the response rate was 100%. On average, each case requires about four hours of corresponding with companies and collating data. Though the process is painstaking and time-consuming it has been worth the effort as it will provide comparable sustainability assessments for investors.

Firms across various industries are making an effort, whether it is a disclosure improvement or updated sustainability targets. One trend that attests to the growing attention paid to sustainability, for example, is the constant increase in the number of companies creating the post of Chief Sustainability Officer. The IEF has already highlighted that 20% of companies engaged with already have a CSO, and well over 50% intend to appoint one.

We are now better equipped to measure companies’ sustainability efforts and information disclosure while tracking their progress, and we can do this in a comparable manner, across industries and geographies. In fact, a company-specific snapshot is now present on all internal stock reviews. The IEF has also proved to be an effective communication tool which has strengthened relationships with our investee companies, creating a solid base for more frequent and transparent engagement.

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