Tideline’s ‘Framework for Impact Labeling’ helps investors communicate their approach to sustainable investing based on the degree to which they integrate Intentionality, Contribution, and Measurement into their investment process
Tideline, a specialist consultant for the impact investing industry, today published a how-to guide for investors seeking to define their approach to sustainable investing. The full report, “Truth in Impact: A Tideline Guide to Using the Impact Investment Label,” is available at https://bit.ly/3yiy8Mu.
The guide also introduces the Tideline Framework for Impact Labeling, which compares and contrasts different approaches to sustainable investing according to the degree to which those investment approaches integrate three core pillars of impact investing:
- Intentionality – Explicitly targeting specific social or environmental outcomes, such as the UN’s Sustainable Development Goals (SDGs);
- Contribution – Playing a differentiated role to enhance the achievement of the targeted social or environmental outcomes; and
- Measurement – Monitoring and reporting impact performance based on measurable inputs, outputs and outcomes.
Within the guide, Tideline explains why the impact investment label should be reserved for funds and strategies that combine high degrees of Intentionality, Contribution, and Measurement, although the framework recognizes that a larger universe of products can rightly claim to be “impact-focused.” The framework is designed to show how all sustainable investment strategies incorporate elements of Intentionality, Contribution, and Measurement, and how by analyzing the levels of each, investors are able to consistently and accurately differentiate between impact investing, thematic investing, and ESG-integrated investments.
“A growing number of asset managers are unsure of what it means to claim the ‘impact’ label, and are uncertain of what such a label may communicate to investors and other external stakeholders,” said Ben Thornley, Managing Partner at Tideline. “In the absence of universal standards for product and fund labeling, we believe accurate self-classification backed up by robust evidence and independent verification is a critical part of any sustainable investment journey and essential to growing the sustainable investing space with integrity.”
To help address the key areas of confusion in the impact investing field, the guide also includes case studies that show how three of Tideline’s clients—including an emerging markets public equities manager, a global environmental commodities investor, and a European real assets investor—were labeled according to the framework.
Tideline was an early pioneer in impact labeling, coining the term “Impact Classes” and working closely with the Impact Management Project (IMP) to develop the intellectual capital that resulted in the creation of the Avoid Benefit Contribute (ABC) classification system. This ABC system was designed to help bring more clarity to the range of intended outcomes in sustainable investing. More information about Impact Classes is available on the IMP website at https://impactmanagementproject.com/investor-impact-matrix/.
In 2016, Tideline, together with Cathy Clark at Duke University, published a working paper titled “Navigating Impact Investing: The Opportunity in Impact Classes” to bring greater clarity to the field of impact investing with a set of common definitions and practices. That paper is available on the Tideline website at https://tideline.com/navigating-impact-investing-the-opportunity-in-impact-classes/.
Tideline is a women-owned, specialist consultant for the impact investing industry. Since 2014, Tideline has provided expert, tailored, and actionable advice to institutional asset managers and allocators deploying over $250 billion in impact investment strategies and solutions. Learn more at www.Tideline.com.