Population growth, resource scarcity, environmental degradation, and a myriad of social issues are increasingly motivating investors to examine the social and environmental impact generated by the companies they invest in.
London based WHEB Asset Management (‘WHEB’), portfolio manager of the Pengana WHEB Sustainable Impact Fund, have created an investment process with a focus on investing in companies that provide solutions to sustainability challenges.
WHEB have developed a bespoke methodology to measure the environmental and social impact of their investments.
IMPACT CALCULATOR
The Pengana WHEB Sustainable Impact Fund invests exclusively in companies providing solutions to critical sustainability challenges.
The impact calculator illustrates the underlying positive impact that companies in the Fund’s investment portfolio help create.
This positive impact is ultimately generated by the end users of the products and services, for example: the owner of the electric vehicle, or the homeowner who installs insulation or buys renewable power. Investors in the Pengana WHEB Sustainable Impact Fund are aligned with these positive impacts by investing in the companies that manufacture these products.
The Fund's mission is to advance sustainability and create prosperity through positive impact investing. All investments have positive social and/or environmental impact. This detailed methodology document sets out WHEB’s approach to assessing and measuring the positive impact associated with the products and services sold by companies held in the investment strategy.
SUSTAINABLE DEVELOPMENT GOALS
The UN Sustainable Development Goals (UN SDGs) were agreed by the world’s governments under the auspices of the United Nations in 2015. The seventeen goals set out aspirational and demanding targets for the world to achieve by 2030. The SDGs send a powerful message to the investment community at to what the world’s governments consider as development priorities through to 2030.
WHEB’s investment strategy supports the achievement of the UN SDGs. 100% of the strategy is invested in businesses that directly support seven of the UN SDGs through the products and services that they sell, and which also indirectly support the remaining ten UN SDGs through their management practices and policies.
Click on each Sustainable Development Goal to see examples of how WHEB’s investment strategy supports that goal.
IMPACT MAP
All products and services have an impact. For some, it is a negative impact – harming or undermining the social and environmental systems on which life depends. For others, the impact is positive, helping to support or even restore these systems. We believe that understanding and assessing ‘impact’ is becoming a third dimension of investment expertise alongside established disciplines in assessing investment risk and return.
WHEB’s ‘impact engine’ is an analytical tool that rates the overall impact ‘intensity’ of the products and services offered by companies. This tool captures the different dimensions of positive impact that are created by products and services and provides an overall impact intensity rating for the company as a whole.
A second step in the investment process assesses the overall quality of the business including how it manages critical environmental, social and governance (ESG) issues.
Only companies with a positive impact are considered for investment. More than 80% of listed companies receive negative scores in the impact engine and are not candidates for investment.
ENGAGEMENT CASE STUDIES
Company engagement in 2019 (by topic)
- Governance (not ESG Related)
- ESG Disclosure and Governance
- Social Issues
- Environmental Issues
In 2019, we engaged with 43 individual companies representing 83% of the companies held in the investment strategy at the year end.
In many cases we engage businesses on more than one issue in the course of the year. In total there were 112 separate engagements with companies. The majority of engagement is on corporate governance issues like the independence of board directors or CEO remuneration (32% of all engagements). 24% of engagement was focused on encouraging more and better ESG disclosure from companies. The remainder address social issues like gender diversity (23%) and environmental issues like climate change (21%).
Effectiveness of company engagement
- Successful
- Partially Successful
- Unsuccessful
We also capture information on how successful we believe we have been with our engagement.
A ‘successful’ engagement is one where the company agrees to amend its approach to the issue in question. A ‘partially successful’ engagement is one where the company acknowledges our concern and agrees to consider it but does not commit to change anything. An ‘unsuccessful’ engagement is one where the company either does not respond to us or refuses to amend its practices.
