Situation:
- Uses standard data provider to be compliant with SFDR, PAI, EU Taxonomy
- Is in the process of extending ESG scope to impact investing
- Has identified or is in the process of identifying impact themes and SDG targets
- Limited resources for (ESG/Impact) data management
- Impact investing challenges (governance, scope, scale, investment opportunities, liquidity level)
Impact Orange Partners’ approach:
- Impact measurement overall portfolio with alternative data provider and proprietary tool
- Measuring compliance with established SDG targets
- Advising on how to move the portfolio towards the SDG targets
- Use so-called ‘Impact budgeting tool’ to optimise ‘impact level per euro invested’ versus risk budgeting method (optimisation return per unit of risk taken)
- Advise on portfolio adjustment; similarly minimum standards for other SDGs or criteria
- Advise on specific impact investments in line with pension fund objectives
- Setting up impact funds or ‘sub-advising’ impact funds set up by pension funds
Challenges for Impact Orange Partners and its client:
- Quantification of impact for illiquid/alternative investments and thus the ability to estimate the impact of the overall portfolio
- Sense of realism on optimisation tool: maximising impact given TE (or other risk measure) remains static, but provides great insight. How are multiple measures taken into account.
- Impact effect of an individual change on total portfolio (incremental analysis). Also distinction between ‘one-off’ impact effects versus ongoing impact effects (‘Impact continuity line’)
