IMP+ACT Alliance: A new way to understand the impact of your investments

‍We talked with Claudia Coppenolle, Co-Founder and CEO of the IMP+ACT Alliance, about their June 24th, 2020 launch of the IMP+ACT Classification System.  

The IMP+ACT Alliance is a public-good technology initiative, sponsored by the City of London Corporation, Deutsche Bank and the Impact Management Project. Strategic partners, among others, including the UK Impact Investing Institute, Toniic and the Make My Money Matter campaign.

The goal: Allow investment practitioners to better understand the social and environmental impacts of investments by providing a technology solution that supports efforts to assess, measure and manage these impacts. The IMP+ACT Classification System (ICS), a digital application developed by the IMP+ACT Alliance, aims to drive greater convergence of transparent impact measurement and management in investment communities globally.

The IMP+ACT Alliance was initiated, and grant funded as part of an “Intrapreneur Initiative” at Deutsche Bank launched in October 2018. In September 2019, it was spun out of Deutsche Bank to be incubated within the Impact Management Project (IMP) as a public good. After the successful Proof-of-concept and additional funding from the City of London Corporation the IMP+ACT Alliance is now run as an independent technology programme and awareness campaign facilitated through Bridges Insights.

We need better education and understanding of ESG factors for more informed investment decisions that support the UN Sustainable Development Goals.

What led you to found the IMP+ACT Alliance?

“Before I started the IMP+ACT Alliance, I was at Deutsche Bank for ten years. I worked in the Chief Digital Office where I was responsible for the client insights team in the FinTech space. This meant listening to the market, seeing where the problems are, and then talking to the product development team to explore what technological solutions were possible. For multiple years I have been engaged in various ESG topics and I wanted to combine my passion for technology with my passion for sustainability and topics related to the UN Sustainable Development Goals (UN SDGs).”

What is the goal of the IMP+ACT Alliance?

“The IMP+ACT Alliance is about partnership and bringing the investment community together. It’s about practitioner led innovation. Working with our network to develop solutions that meet the market where it is today. It’s, importantly, about creating a solution that can support asset owners with more information to better understand and manage the environmental and social performance of their multi-asset-class portfolios.”

Covid-19 has shown how ESG factors can impact financial performance of investments and has shown that  better education and understanding of ESG factors is needed  for more informed investment decisions that support the UN SDGs.

We need consistent metrics for ESG Investments

The challenge to date results from a lack of standardisation and regulatory control about what strictly accounts for a sustainable investment.

There are varying views as to how social and environmental impacts can and should be consistently measured and disclosed.

Depending on industry and asset class, there are various degrees of standards and metrics used to report data and measure impact. In addition, asset owners are becoming increasingly interested in gathering impact data for their investments e.g. to mitigate financial risk or to advance global goals like the UN SDGs. Because of the current status quo and varying approaches on how to measure and manage impacts Claudia explained that asset owners are lacking  important data on the environmental and social performance of their portfolios when allocating capital.

She said:

“Regardless of what investment intentions are, we are trying to give investors and portfolio managers access to data that will allow them to make more informed investment decisions by better understanding the social and environmental impacts of investments .”

About the IMP+ACT Classification System (ICS)

The ICS (IMP+ACT Classification System) is a digital platform which was developed in practitioner-led innovation sprints and supports asset managers with a simple digital process to describe how they currently assess, measure and manage impacts.

Information collected through the ICS, enables asset owners to get a first view on the type of impacts in their portfolio and an initial degree of comparability between the impact performance of investments across asset classes and sectors.  The ICS utilises a consistent format and logic (IMP’s Impact Classes) to categorise impacts of investments which helps asset managers to consistently describe and report impacts of different assets at portfolio level, while becoming better educated about the nuances of environmental and social performance at asset level.

In addition to offering the ICS, the IMP+ACT Alliance will be holding practitioner-led workshops so that industry peers can talk about how they have thought about the classification process.

“Publishing information, even if it's self reported, will help allocate capital more purposefully.”

The ICS is aiming to integrate and be interoperable with as many platforms as possible. They currently have a strategic partnership with the digital platform of investor network Toniic Tracer. Through collaboration and data sharing, Claudia hopes to decrease the reporting burden on practitioners.

Thanks to external funding, this service is offered free of charge.

How should asset managers understand impact classification?

“Impact Classes  provide a common logic and standardised organising structure which allows to describe and categorise types of impacts at a portfolio level. It is an important first step and a concept that meets the market where it is today whilst the investment community moves towards greater consistency in the way underlying impact data at an enterprises level can be collected and reported. ”

“Integrating the logic of Impact Classes into the ICS will allow asset managers to start communicating how they’re thinking about measuring and managing social and environmental performance in a more transparent and comparable manner.”

How the investment community can use the IMP+ACT Classification System:

1. Asset owners can nominate and request their managers to classify funds in order to map the underlying investments of their multi-asset class portfolios  by types of impact.
2. Asset managers can sign up for the ICS and provide information about their funds in the form of Classification Statements.
3. Qualified investors can use the ICS’s public directory to find impact aligned investments and use the published Classification Statements to understand  the processes used to determine a fund’s impact and the type of data available.
4. Portfolio managers can use classification information to understand and manage impacts of their portfolios.

Final thoughts:

The service is currently available free of charge for any accredited fund managers and is live. You can sign-up at: https://www.impactalliance.co.uk/

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