Q: What are you rating?
A: We rate the positive environmental and social impact that a fund manager has.
Q: Why is this different from other ratings that I’m seeing?
A: We’re the first to focus only on what’s relevant to impact, and account for everything that’s relevant to impact. Instead of rating what companies a fund owns, we rate what a fund does. Take a look at our methodology to learn more.
Q: Why did you choose these funds?
A: We took a broad sampling of funds that are available to everyday investors. We specifically focus on listed public equity funds – stocks that anyone can buy, which comprise a basket of public companies. We have a sampling of funds from across multiple geographies, we included some funds from the largest global asset managers, and we included some funds from managers focused specifically on social impact. Soon, we’ll be expanding to cover vastly more funds, which will be vastly more fun.
Q: What should I do with this information?
A: This does not constitute investment advice in the legal sense or otherwise. You can use this information to have a more informed conversation with your financial advisor or fund manager about impact. You can use this information when thinking about which funds best advance your values.
Q: What should I do if my fund scores low on impact?
A: You can use the principles in the methodology to have a conversation with your fund about how it can increase its impact. Ask how it engages with companies, policymakers, and the public on the issues you care about.
Q: Why do you just focus on funds that own public equities (companies you can buy on the stock market)
A: Everything anyone does has some impact on the world around. Public equities are huge companies, so they have a huge impact. From our own research, we bring a new framework for the impact of public equity funds. We hope to cover other types of investments, such as bonds and private companies, in the future.
Q: Where does the data come from?
A: The data come from a number of publicly available sources and updates provided by fund managers. Take a look at our methodology to learn more.
Q: How do you define impact?
A: There is general convergence around what constitutes environmental and social impact. Fund managers may have different focus areas within social and environmental impact. For example, one fund might focus more on climate change, and another might focus on human rights. We don’t make any judgments around which of these issues is the most important to focus on. Instead, we measure how well a fund works to achieve its stated social and environmental impact goals through its fund management.
Q: Won’t funds that worry about ‘impact’ detract from my financial performance?
A: Not in the way that we look at and define ‘impact.’ There is no reason why engaging with the companies you hold would have any bearing on returns. In fact, several studies have argued that successful ESG shareholder engagements have a positive relationship with financial performance (Dimson, Karakas and Li 2015, Karpoff 2001, and Becht, Franks, Mayer, Rossi 2009).