Strategies targeting tangible, real-world impact alongside financial returns.
What makes a fund suitable for the Impact pathway?
Our Impact funds have the following in common:
- A focused sustainability objective, which is as important as the fund’s financial target
- Reporting that covers a range of sustainability metrics
- Exclusions, designed to rule out activities where neither investment nor engagement stand to deliver a net positive impact
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What does this mean in practice?
Exposure to companies forging a more just and sustainable future
The companies we invest in have a story to tell. Often, they are businesses with an opportunity – the opportunity to generate either a positive, or a reduced negative, impact. They might otherwise be businesses that are already providing scalable solutions to today’s social and environmental challenges. Importantly, we believe a company’s impact potential can lie in its products and services or, equally, its relationships with suppliers and the wider community.
From companies addressing social inequality, to those tackling climate change by producing more cost-effective wind turbines – or shifting their product suite to align with a low-carbon world – we invest and engage over the long-term to drive real, scalable change.
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A robust process for considering impact credentials
Funds in this pathway have a dual objective incorporating impact, as well as financial, metrics. Where a company’s activities touch upon material issues, investors can expect a clearly defined impact or engagement thesis.
Impact Opportunities
SDG Engagement Equity
Engagement provides for a multitude of impact opportunities to be realised across a company’s value chain.
Impact that is tangible, measurable, meaningful
Intentionality is one of the key tenets of funds in this pathway – teams must demonstrate they have deliberately pursued positive, real-world impact alongside financial gains. As such, and in line with our classification of these as Article 8 or 9, investors can expect robust reporting that illustrates progress in concrete terms.
Teams must consider a company’s ‘intentional desire’ to do good, and have a clear process for considering impact.
SDG Engagement Equity
An engagement thesis will be drawn up outlining the impact a company can potentially realise through changes in supply chain practices, direct operations or via products and services. There must be potential to drive change at the corporate level.
SDG framework impact opportunity engaged potential
Identify opportunities
Active management corporate and industry engagement long-term horizon
Generate change
Positive investments returns positive societal outcomes impact measurement
Impact Opportunities
The team conduct an impact assessment, which uses a top-down framework to translate the UN SDGs into investible themes. A company must have a core product or service that contributes to one of the team’s themes.
Water
Food security
Health & Wellbeing
Education
Financial Inclusion
Future Mobility
Impact enablers
Generate change
Circular economy
SDG Engagement Equity
The team tailor their engagement plan to each holding, working closely with companies to encourage new initiatives and relationships, accelerate progress and raise ambitions. The aim is to improve long-term success and SDG contribution.
Raise SDG opportunity at the appropriate level
Company recognises the specific opportunity as valid
Develop and commit to a credible plan for change
Successful implementation of the plan accompanied by disclosure of relevant outcome or impact metrics
Impact Opportunities
The team consider whether a company’s products and services generate an impact that goes beyond what might otherwise have occurred.
This steers the team towards truly innovative companies addressing the world’s most pressing needs. They invest and engage to help these companies reach their potential.
Reporting is key, as it gives investors the means to monitor and measure the impact of their investment.
SDG Engagement Equity
Engagement metrics are used to illustrate activity and progress towards objectives at both the company and portfolio level. This is supplemented with qualitative and quantitative data to evidence impact generation.
Impact Opportunities
Qualitative and quantitative data – at the portfolio, theme and company level – is used to report on the team’s net positive impact.
Engagement driving the sustainability agenda
Funds in the Impact pathway will use engagement to drive forward our sustainability agenda. We believe achieving change requires partnering with companies over the long-term – success, in engagement terms, is dependent upon speaking to the right person, about the right issue, at the right time. Fund engagers work with our diverse and highly experienced stewardship team, EOS at Federated Hermes Limited, to devise and deliver an engagement plan that fits a company’s particular business model and geographic footprint. With £1.8tn in stewardship assets under advice (as of 30 June 2024), EOS has significant influence and expertise.
We have been at the forefront of investment and sustainability since 1983, pioneering global stewardship, developing innovative ESG strategies, and advocating for a financial system that works for all.
Our £1.8tn in stewardship assets under advice (as of 30 June 2024), ground-breaking work in ESG integration, and the key role we played in developing the Principles for Responsible Investment (PRI) illustrate our authenticity, commitment and influence.
EOS at Federated Hermes Limited – changing companies for good, from within
Our industry-leading stewardship service provider, EOS at Federated Hermes Limited (EOS), was founded in 2004, on a legacy dating back to 1983. EOS pursues constructive engagements with corporate boards and executives on environmental, social, and governance issues, enabling investors to be more active owners of their equity and fixed income assets. Working with investors to change companies for good, from within, EOS continues to evolve best practice stewardship, supporting stronger financial performance and better outcomes for society.
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