In an increasingly crowded investment landscape, it can be difficult to differentiate and communicate the impact goals – and ultimately, impact performance – of a particular investment or a portfolio of investments.
The Investor’s Impact Matrix, developed through the Impact Management Project, allows investors to map their entire portfolio or specific products by their effects on people and planet. The Dutch asset manager PGGM, the KLF Foundation, and 40 members from the GIIN Investors’ Council are some of the few who have already mapped their investments using the matrix. Thanks to these first movers, we are drafting a guide for any type of investor to self-map their portfolio or products.
The guide will be available in the coming weeks. If you would like to receive it in your inbox once we have released it, let us know here.
The Investor’s Impact Matrix with illustrative products
The Investor’s Impact Matrix below brings together the impact goals of the businesses being invested (x-axis) in and the strategies that investors use to contribute to impact (y-axis). These dual criteria allow us to plot the landscape of relevant investment options currently available to investors. An investor can plot their existing portfolio and then, over time, transition that portfolio to be impactful in the way that best suits their intentions and constraints.
PGGM’s Investor’s Impact Matrix: Mapping the €220B portfolio of a pension fund
PGGM has a total of €220 billion of assets under management, as the manager of the second biggest pension fund in the Netherlands, PFZW, as well as a few smaller pension funds. In working with the Impact Management Project, PGGM sought to more accurately understand and communicate what impact their investments are making, and precisely what their role has been in the process.
The results, along with insights we gained along the way, are showcased in this report, in the hope that we can contribute to the ongoing discussion about how best to categorize investment products by their impact. We learned:
- The effects of 12% of PGGM’s portfolio cannot be established at all due to the very nature of the asset class and/or the almost total absence of data.
- For the bulk of the PGGM portfolio (81%), businesses try to avoid harm. In the absence of data this rests on the crucial assumption that these investments respond effectively to the various instruments PGGM wields to minimize negative impact (exclusions, engagement, ESG integration).
- 4.5% of the portfolio provides general benefits to people and/or the planet through our Investing in Solutions (BiO) program, which targets investments with measurable impact that relate to several SDGs.
- Also through the BiO program, about 2.5% of the portfolio is aimed at making a significant contribution to positive outcome(s) for specific target groups or causes that are underserved, including climate and pollution.