Staying focused in an expanding impact universe - Wellington Management

Investment Specialist Jake Otto assesses how to define the impact universe and then measure the social and environmental good done by each portfolio company.

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... Impact investing has entered the mainstream. Five years ago, few investors were even thinking about sustainable investing, let alone impact equities and bonds. Yet we have observed demand for both increase enormously. We have seen growing awareness of social and environmental challenges and regulatory pressures on institutional investors to reduce risks and offer sustainable investment approaches to end clients. Wellington Management's research has shown that the universe of impact investments is growing. Their estimate for the size of the impact bond universe has increased by 22% over the past year, creating greater potential opportunity. However,they believe it also requires rigorous analysis to select issues that can generate competitive investment returns and, crucially, can also deliver real impact. In their view, measuring and reporting the impact of each issue is key to proving they can deliver and thus attract more capital into this space.

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