ESG data provider, Impact Cubed, has launched new tools on its automated platform so
investors can see into fund holdings, measure impact, and report to regulators.
The firm writes that providing enhanced transparency with factual ESG data means investors can create better funds and avoid greenwashing concerns. The tools also allow pension funds, wealth managers and family offices to compare and validate external managers’ ESG performance and shakeout those with little impact, the firm says.
Impact Cubed says that its newly launched tools get around the current challenges in the industry to integrate ESG into funds using subjective ESG scores that have inconsistent, patchy coverage. The platform is powered by Impact Cubed’s own robust, factual ESG data covering all listed equity issuers, the most comprehensive coverage available in the market.
“The ESG fund boom shows that investors want to see ESG factors taken into account, but it’s tricky to provide evidence a fund does that,” says Arleta Majoch, chief operating officer at Impact Cubed. “Linking our factual data to tech-enabled tools is a powerful antidote to the ESG ratings confusion and concerns about greenwashing.”
The end-to-end solution provides portfolio level analytics with full transparency to underlying holdings’ ESG, impact, and UN SDG performance. The tools allow investors to analyse securities against market benchmarks or peer groups to understand real world impacts like water saved or reduced carbon emissions. Investors can also customise ready-made reports for clients or regulatory disclosures, including EU Taxonomy, SFDR, or TCFD. The tools can be fully integrated into investor workflows
with seamless APIs or access to a web application.
The platform builds on Impact Cubed’s well-established equity and debt impact models which are aligned to the UN SDGs. The innovative use of factor data (rather than scores or ratings) allows investors to validate an ESG strategy with objective, transparent facts on performance. Impact Cubed writes that its unique patent-pending approach to measure portfolio impact in basis points of tracking error helps speed up the integration of ESG into the investment process and allows for comparable measurements across all asset classes.
Sustainable fund assets continue to grow rapidly, topping USD2.7 trillion. Over 400 sustainable funds are now available to US investors, and one in four European funds have classified themselves as sustainable. This growth has led to investor confusion over the proliferation of funds marketed as ESG, many of which lack transparency on ESG and impact performance. This rise in sustainable investing comes at the same
time the investment industry is deploying automated technology to provide for more customised investment solutions to a wider range of clients. Merging sustainable investing solutions with advanced technologies leverages these two trends for a differentiated client experience.