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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