Assessing the impact of companies at such a granular level with quantifiable outcomes allows the team to achieve two important objectives:
- Portfolio managers can trace and account for each investment, providing a means through which they can monitor a company and ensure its impact intentionality as a business.
- To provide clients with a quantifiable indication of how their capital allocation is helping achieve positive impact, as aligned to the 17 UN Sustainable Development Goals.
The team has carefully selected 20 impact metrics, which have been grouped into 11 relevant themes. Each theme contains either, or both, an operations-based metric relating to a company’s operations, or a solutions-based metric relating to the specific outcomes a company is looking to provide.
According to the Federated Hermes Impact Database, in 2019, the capital deployed in the Federated Hermes Impact Opportunities Fund achieved a wealth of impactful outcomes, including the following:
- 33.4k MWH of clean energy generated
- 1.1k tonnes of waste was recycled plus a further 201 tonnes through recycling programs in operations
- Avoided 3.6k MT of food waste
- Financial access was given to 4.7k people
- 153k patients were treated and 7k lives were extended
- 2.5 hectares of forest were protected
These will be updated once 2020 company data is available.
Ingrid Kukuljan, Head of Impact and Sustainable Investing, at the international business of Federated Hermes, said “After looking at the tools available in the market to analyse impact data, we did not believe that any one provider had the depth of understanding and granularity we required at a company level. It is imperative that all investee companies generate a positive impact that can be measured quantitatively, as well as qualitatively. We have put a significant amount of time and resource into producing the database and it has yielded extremely valuable results. Not only can we clearly demonstrate to clients the real impact of our investments, but also use it as a framework to assess companies on our watchlist.”