Unlike financial return, impact can be difficult to define, challenging to quantify, and costly to implement as an investment strategy. Few standards exist. Impact investors must choose outputs, methods of measurement, and styles of data analysis. Benchmarks that balance impact and investment performance are lacking.
The Morningstar Global Sustainable Activities Involvement Indexes include public companies whose business activities address the world’s social and environmental challenges, as defined by the UN Sustainable Development Goals. The indexes include companies that derive at least 50% of their revenues from one or more of five impact themes identified by Sustainalytics, a Morningstar company specializing in ESG data and research. The indexes, which feature stringent ESG screening in addition to tilting weight by impact revenue, can augment the toolkit of impact investors.
Author:
Dan Lefkovitz, Strategist, Morningstar Indexes