The views expressed are those of the teams comprising Wellington’s Impact Platform including our impact equity and fixed income investment teams and IMM Practice. For these teams and strategies, impact measurement and management and engagement is a core component of the investment process. These practices do not necessarily extend to other strategies that Wellington Management offers. Views are those of the authors at the time of writing, and other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
Impact measurement and management
Impact measurement and management (IMM) is a core component of our Impact Team's impact investment process. We see IMM as critical for evaluating the holistic impact of a company or issuer — specifically, how its products, services, or capital allocations contribute to our impact objectives.
The formalized practice of measuring a company’s or issuer’s overall impact on society and the environment. The aim is to use both qualitative and quantitative data to track whether a portfolio and its underlying investments are having the intended net positive effect on people and/or the planet.
The regular evaluation of impact measurement data, relative to the scale of the impact problem and the desired social or environmental outcome. The aim is to use findings to inform investment decision making in ways that mitigate negative externalities and maximize positive effects.
IMM enables investors to demonstrate — and improve on — their impact. A consistent, systematic IMM approach not only helps confirm that we do what we say we do in the context of impact, it also allows us to learn from the data, enhance our processes, and increase the potential for positive real-world change.
Wellington’s IMM approach builds on nearly a decade of experience (starting in 2015, with the launch of our Global Impact strategy). Our dedicated IMM Practice, which works closely with our impact investment and ESG research teams, also shapes our IMM methods. Combined, these elements help us maximize impact potential with a high-integrity approach.
We believe IMM is most effective when incorporated throughout the impact investment process.
KPI collection, evaluation, and monitoring
The IMM Practice collects defined impact key performance indicators (KPIs), based on publicly available documents, estimating data using proxies and/or other transparent methodologies if data is lacking. We assess KPI trends to understand whether each holding has the intended positive impact and meets expectations. This analysis can provide differentiated insights for the impact portfolio managers, supporting our bottom-up, research-based investment approach.
Issuer engagement
If a desired KPI is missing or falling short of our expectations, or if we need to validate our impact theory of change, we may engage with a company or issuer to request the information or identify an alternate metric.
Data aggregation
Where possible, the IMM Practice aggregates impact KPIs to demonstrate the combined impact of Wellington's public-market impact approaches.
Informing investment decisions
We leverage our impact lessons learned to inform investment decisions with the goal of minimizing negative externalities and maximizing the positive impact of each investment.
A dedicated practice
Our dedicated IMM Practice is a central resource, focused on helping Wellington’s impact investors better understand the wider societal and environmental impacts of their investments. The IMM Practice, whose members bring diverse experience and a broad range of skills, plays a critical role in:
Built on industry norms and frameworks
Absent universal standards, the following impact frameworks are most aligned with our approach. We integrate elements of each into our impact investing philosophy and process.
Theory of change: A cause-and-effect description of how we believe our investment furthers a desired impact and why that impact is both reasonable and achievable.
Logic chain: A linear path from capital invested to a company’s or issuer’s activities and overall impact.
Impact Management Project’s five dimensions of impact: A set of industry norms that provides a common framework for investors and investees to measure the What, Who, How Much, Contribution, and, crucially, Risk of impact.1 Considering negative externalities and other types of risk (evidence, execution, etc.) that can undermine positive outcomes ensures a holistic view of impact.
IRIS+: A comprehensive library of metrics, developed by the Global Impact Investing Network (GIIN), to measure investments’ social and environmental performance. We use KPIs aligned with IRIS+ wherever possible to report on impact in a standardized, comparable manner.
United Nations Sustainable Development Goals (SDGs): The 17 SDGs are a key component of the UN’s 2030 Agenda for Sustainable Development to “provide a shared blueprint for peace and prosperity for people and the planet.” In our view, the SDGs help impact investors better understand many of the world’s largest social and environmental challenges. Our 11 impact themes align, directly or indirectly, with many of the goals, and we map our portfolios’ desired impact outcomes to these goals and underlying targets.
Focused on contribution rather than attribution
Impact investors often seek to understand and assess how much of any positive impact achieved is the result of their own activities. It is important to distinguish between contribution and attribution.
Because social or environmental impacts are typically the result of complex factors, precisely attributing these results with a high degree of certainty is often impossible. While we believe that our investment, alongside our broader IMM resources, help issuers deliver impact, in most cases we do not claim attribution, but rather contribution toward better outcomes for people and the planet. In practice, our involvement takes the form of:
These efforts enable us to focus on how we, as investors, contribute to our portfolio holdings’ impact. They also reflect our commitment to advancing the impact investing industry as members of the GIIN.
Impact investing is a complex and fast-evolving field without a blueprint for best-practice IMM. We continually seek to learn and refine our IMM process, remaining aligned with the latest regulatory and industry developments. In parallel, we support initiatives aimed at more standardized, outcome-oriented disclosure, which we believe is critical for the impact investing industry to scale with integrity. The common goal throughout these endeavors is to further our understanding of how best to maximize the real-world positive impact of our investments and transparently share both our challenges and our progress.
1“Impact Management Norms,” Impact Frontiers.
Impact reports
See impact highlights from each of our strategies, along with measurable impact results from the companies and issuers in which we invest.
