a.s.r. vermogensbeheer: Active management of impact progression is becoming increasingly important

a.s.r. vermogensbeheer: Active management of impact progression is becoming increasingly important

Impact investing
Mark Kamerman & Nico Rieske (foto archief asr vermogensbeheer).jpg

In order not to fall into the trap of impact washing, it is essential to measure the positive impact on the environment or society as accurately as possible during a fixed evaluation period.

By Mark Kamerman, Senior Investment Strategist, and Nico Rieske, Head of Equities, both working at a.s.r. vermogensbeheer

Impact investing is a very broad concept and often consists of different types of investments. Sometimes it is difficult or even impossible to measure impact precisely. Impact measurement requires strong collaboration between all stakeholders, but there is currently little consensus on the right method. Unlike measuring financial performance, determining the impact of social and environmental goals has a variety of obstacles to overcome. Due to the complexity and diversity and the lack of a widely accepted and standardized method, the search for the right way to accurate measurement continues for the time being. But as the physicist Galileo Gaililei already stated around 1600: 'Measure what is measurable and make measurable what cannot be measured.' Measuring impact is a learning process, in which the missing pieces must gradually lead to a complete puzzle.

Set objectives and develop a framework

A number of steps must be taken to arrive at a thorough impact measurement. The important first step is to clearly understand the impact objective of an investment. Looking at the evaluation tools and methods that have been developed to date, investment managers can measure the social and environmental impact using the Theory of Change1. This theory provides fund managers with guidance by connecting inputs and activities to outputs, outcomes and finally impact.

By using the Theory of Change model, input data and activities can be compared with the actual results (outputs) against the expected outcomes. This focuses on an impact theme and the required changes needed to solve the problem. An example: achieving a lower carbon intensity for the purpose of mitigating climate change requires shifts in specific sectors, which can be found in technologies, in their deployment or even in policy changes.

In addition, the Theory of Change describes how fund managers should focus on their investments so that they contribute to the desired changes, as well as the steps that are required for this. In this way, fund managers are able to investigate and evaluate impact as well as to test the accuracy of the model. Such an evaluation can be useful for fund managers and clients to notice possible deviations in good time, so that adjustments can be made in time. Deciding on the impact objectives according to the Theory of Change and opting for the SDGs provides guidance when determining the investment strategy.

The second step is to develop a framework to record specific statistics for the performance measurement of the investments. The third step consists of the timely and organized collection and storage of data, always validating for sufficient quality. Subsequently, the insights from the collected data are evaluated. In the last step, data is shared with the most important stakeholders and their feedback is taken into account, which may lead to adjustments in the investment thesis or impact value chain.


FI-4 - 2023 - SemWet a.s.r. vermogensbeheer-Figuur 1


Role reserved for active strategy

Striving for tangible positive change for people, the environment and society should be in the DNA of every impact-oriented investor. It is therefore important to understand how and to what extent fund managers can contribute to resolving ESG issues. The availability of data is crucial for the ultimate determination of impact. The shoe is still pinching there at the moment. Particularly with smaller companies, the available information is often limited, while these are usually the players with whom the difference can be made in the future. For the very big challenges that arise, such as climate change, pioneering and highly innovative companies are needed. By nature, these are not aimed at growing as fast as possible and therefore often remain outside the scope of large data suppliers and research houses.

Therefore, the question remains whether the data supply in that area will ever increase. An active strategy plays an important role here. Central to this is maximizing and optimizing the targeted impact.

Managing impact, important process

For better management of impact, the measurement process of investments should be continuously monitored, in order to take action as soon as the intended impact objectives become diluted. That is why fund managers must use the investment strategy to determine in advance in a strict and extensive selection process which indicators are needed to achieve the desired impact objective. Subsequently, a thorough screening is important to align investments with the intended impact. For example, a company must make clear choices for focusing on an impact theme. This intentionality must be reflected in the nature of the business activities in the regulations and conditions with which the company must comply and in a minimal part of the turnover that is focused on the impact theme.

Essential for fund managers is gathering knowledge to achieve impact on three main levels2: 1) how the companies' activities ensure positive change for people and the planet (investor level), 2) how the own contribution mitigates the impact of the companies invested in (the level of the investment), and 3) how great the contribution is to developing the impact theme within the framework of a major, systematic change (the level of the ecosystem).

Proactive monitoring starts immediately after the selection process. This can be done, for example, by voting at shareholders' meetings, through engagement, by taking a seat on the board or by working together with other market parties. The impact created by the company must be measurable, aiming for the best possible approximation.

The impact performance of the company is measured and monitored by means of predetermined KPIs: fund managers who actively manage usually have a systematic selection process, a well-thought-out engagement strategy and a clear rationale for why the chosen strategy will positively influence the impact of the asset. Accurately determining the contribution not only allows us to understand what has changed, but also whether investors and companies can actually make a difference. The most important question of causality that fund investors must constantly ask themselves is: can selection, monitoring and measurement meet expectations with regard to the intended impact objectives? The answer lies in understanding the big picture and in realizing that achieving full measurability is not the only solution to achieving the most impact.


1 Source Edward T. Jackson – Interrogating the Theory of Change (2013)
2 Source: EVPA – Burning topics on impact measurement and management (2022)


The challenge with impact investing is to measure what is measurable and to make measurable what is not yet measurable.

A solid framework is helpful in evaluating pre-agreed impact objectives and helps communicate impact results to clients.

An active strategy is essential in the selection, monitoring and measurement of impactful investments.

Fund managers who actively manage must have a systematic selection process, a well-thought-out engagement strategy and a clear goal for achieving the desired impact.