KPMG in the Netherlands, KPMG in the Cayman Islands and the University of Cambridge Institute for Sustainability Leadership (‘CISL’) have jointly developed a tool, the Sustainable Investment Framework Navigator (SIFN), that provides asset managers with a greater degree of transparency on the environmental and social impacts of their investments.
Chrystelle Veeckmans, Head of Asset Management at KPMG Luxembourg, explained: “We, and our clients, have been waiting for this moment for many years. Measuring the ESG impact of funds just felt like walking through a thick fog. Finally, with this tool, I feel like we’re coming out of the mist and a fresh, clear day is emerging. The tool is practical and can be used right away: that’s what makes it so different from other initiatives out there. We’re proud to be announcing this truly important moment for asset management and know that Luxembourg will benefit from this work with the CISL. Working in this industry is really fascinating, together we can make an impact and contribute to a more inclusive and sustainable society”
This software as a service (SaaS) tool can assess investment portfolios based on a common impact standard, enabling both asset managers and investors to make more informed sustainable choices with their investments. The SIFN is based on the Sustainable Investment Framework – developed by CISL in conjunction with the Investment Leaders Group (ILG) and is designed at measuring the real-world impact of an investment fund’s portfolio.
The SIFN comprises of a set of six impact themes which asset managers can use as proxies for the performance of their investments and their alignment with the United Nations Sustainable Development Goals (SDGs). These six themes include:
- Climate stability
- Recourse security
- Healthy ecosystems
- Basic needs
- Decent work
The COVID-19 pandemic has revealed an imbalance in our world. Our global society is fast realizing that we have greatly exceeded the Earth's carrying capacity on a global scale. Arjan de Draaijer, Partner, Sustainability, KPMG in the Netherlands said, "The financial sector plays a critical role. Measuring the impact of investment decisions is essential in order to properly interpret the role of the capital markets in the transition to a sustainable economy.”
In a recent webinar, Measuring the sustainable investment outcomes of your portfolio, hosted by KPMG along with CISL and ILG, 53% of attendees surveyed stated that the biggest challenge they are facing in gaining insight into the impact of their investment funds was the lack of common measurement standards.
Dr Jake Reynolds, Executive Director, Sustainable Economy, CISL said, “Measuring the impact on one company on one specific theme is reasonably simple provided the requisite data are disclosed. However, poor data coverage, lack of familiarity with the underlying issues and an absence of standardisation render neat numbers and comparisons difficult. CISL’s framework offers a solution to this problem in the form of six simple quantitative tests based on readily available data. Our collaboration with KPMG will help us to continue to advance the framework as new data sources become available, including in the vital area of social impact.”
Will Oulton, Global Head, Responsible Investment at First Sentier Investors and Chair of the Investment Leaders Group added,“This framework clearly demonstrates the ILG's mandate to provide member-driven, solution-based outputs backed by world class academic expertise. In co-developing and piloting the framework, the Group's work will help the market navigate a key sustainable investment challenge: the ability to communicate to investors, social and environmental outcomes from investment portfolios.”
KPMG professionals have invested substantially in technology and innovation in order to help clients overcome their biggest challenges and SIFN aims to do just that. The SIFN provides the ability to take complex information to gain meaningful insights with a simple dashboard to check their alignment with the SDGs. “It is part of our KPMG vision to help our clients build a better world that focuses on sustainability, resilience and impact,” said Anthony Cowell, Head of Asset Management, and Partner at KPMG in the Cayman Islands.
Ravi Beegun, Chief Innovation Officer at KPMG Luxembourg, explained how innovation had enabled this development: “Data is at the very heart of this project. It’s a true example of how joining up the dots through innovative methodologies, data and technology can give a real-added value: not just to individuals or companies, but to whole industries and even society. This solution is pragmatic, easy-to-use and integrates well with current working practices—this is what data and technology can achieve when it’s working at their best. We’re truly proud to be a part of this wonderful initiative, a milestone on the journey to a more sustainable world.”
The ultimate goal is to assess all portfolios on a common basis to bring clarity for investment clients and beneficiaries. In doing so, it will help to encourage the movement of capital towards more environmentally and socially sustainable investments and supports asset managers to disclose relevant data in a consistent way.
The SIFN is available now. To learn more, click here home.kpmg/nl/SIFN
Press release by KPMG Luxembourg
Publié le 25 novembre 2020