Supporting an impact investing standard

Written by Victoria Leggett on 11th Jun 2019

Union Bancaire Privée (UBP)’s roots trace back to 1969, when Edgar de Picciotto established the Compagnie de Banque et d’Investissements (CBI) in Geneva. In the 1970s, CBI was one of the first banks to use hedge funds to help grow its clients’ assets.

UBP became signatory to the UN Principles for Responsible Investing (UNPRI) in 2012. In 2017 we embarked on the process of integrating responsible investment through both its private banking and asset management divisions.

Myself and my co-manager Rupert Welchman manage the UBAM Positive Impact Equity fund and have a combined 35 years of investment experience.

We launched the fund due to demand among a broad cross-section of our client base. The publication of the UN Sustainable Development Goals and its reverberations into capitals markets created a powerful launchpad for this investment style.

UBP has reached a point of self-awareness in its constant reassessment of its long term strategic path of travel where responsibility and positive impact align closely with the aspirations of a family owned company. If we can say it – the family have themselves invested.

Rupert and I are personally highly motivated. As with many of our investors, we see our lifestyle and investment philosophies as mutually inclusive creating a strong foundation for an authentic investment process.

To build our portfolio, we use bottom up key performance indicators (KPIs) identified through direct engagement with each company within our portfolio and our watchlist. We back up this direct route to measurement with interactions with associations and relevant industry bodies to identify common impact measurements.

Then we use top down KPIs through selected databases that look to normalise measurement as optimally as possible. However, of course it is worth highlighting that measurement is a tricky topic.

Supporting an impact standard

We recognise and clearly identify weaknesses in non-financial data measurement, but do not believe it is a barrier to launching an impact fund. Instead, we collaborate wherever we can to improve measurement transparency and to celebrate listed companies that are leading the field.

We have a partnership with the Cambridge Institute for Sustainability Leadership (CISL), who helps us measure our impact.

We are a member of the Investment Leaders Group, which is facilitated by CISL. UBP is one of 12 investors and together with CISL, we aim to dedicate resource to under-researched topics, where we can add a point of difference and a practical solution to our peers in the investment world (such as the long-termism toolkit and the recently launched impact measurement report).

The Impact fund is in fact the sample fund in the report and we worked closely with CISL in developing and testing the metrics used.

There is an industry-wide challenge with regard to the measurement of impact (particularly in listed markets).

To an extent we can solve this through bottom-up engagement and the resulting KPIs, but for a broad adoption of impact across the investment community, standardised and comparable impact data would be invaluable – for investment managers and fund selectors.

Measuring success

For us, success is strongly linked with the profile and rationale of the end investor. We have succeeded if our fund is accessible to every type of end-client and that their choice is a result of their engagement with our impact journey in addition to the financial returns.

Consequently, being able to deliver on this twin aim of financial and impact performance is critical to create this success. We also take our role as stakeholders seriously – we hope that our engagement with our underlying holdings can help them to progress and being able to map and measure this over time would be a great marker of success to us.

We believe that it should be possible for everyone to be able to invest in a way which marries their financial and ethical goals. Listed equity is an excellent vehicle to provide the reach that some other asset classes can’t and the scale of secondary markets means that we can create big change if we work together.

Our investment choices are made with a long-term time horizon. We want to provide supportive and constructive capital to companies which are trying to create positive change Investment expertise – the impact we make will ultimately be larger if we make good investment decisions for the long-term.

This article is taken from the Good Investment Review of Ethical and Sustainable Funds Spring 2019, your guide to the best sustainable investment funds on the market.