Waterfall implementation: layering sustainability objectives in your investment strategy – Isio

In the second paper of Isio's three-part series on sustainable investment strategy implementation, they present a framework for layering multiple sustainability objectives in the portfolio, as well as the challenges that can arise from doing so.

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... While we live in a complex world, we need simple solutions for investor action. Isio present a framework for layering multiple environmental and social priorities in the portfolio. The key considerations for investors include:
  • Understanding the sustainability priorities of the investor.
  • Seeking out and considering biases or concentrations within sustainable opportunities within asset classes (and sectors).
  • Setting social and environmental priorities and objectives for individual mandates.
  • Monitoring sustainability impact.
The impact agenda itself can create a bias towards actively managed products, which can demonstrate improvements in sustainability outcomes (additionality, as compared with today’s baseline) – with the active bias in 'impact investing' itself beginning to be embedded within UK regulatory developments. This is juxtaposed against a growing trend of passive investments, globally, and needs consideration.

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