Sonen does not consider impact investing as a distinct asset class or as a separate part of the investment process. Instead, we see impact as an integral part of portfolio construction, and that impact itself affects risk, return expectations and overall value creation. Our investment process includes simultaneous impact and financial evaluation, combining the discipline of institutional investment management with a systematic process to measure relevant environmental and social indicators. We believe this is essential in order to appropriately manage risk and evaluate opportunities, while generating market-based financial returns with meaningful long-term positive social and environmental benefits.
Sonen’s impact evaluation and measurement methodology is based on the manifestation of impact across different investment approaches, most readily described by Sonen’s Impact Investing Spectrum.
Historically, asset owners bifurcated their capital into two worlds: traditional investing, to maximize profits; and philanthropy, to achieve a desired social or environmental good. At Sonen, we define Impact Investing as the range of investment opportunities that exist between this division.
Sonen’s primary focus is within the “Sustainable” and “Thematic” portions of this spectrum, aimed at optimizing impact returns and financial returns together.
1) Sustainable Impact Investing actively identifies investments across asset classes that exemplify high performance along Environmental, Social, and Governance (ESG) standards and criteria. Underlying assets’ ESG performance is evaluated, aggregated and compared to market benchmarks to illustrate relative impact performance along these dimensions.
2) Thematic Impact Investing includes highly targeted investments in which social and environmental impact themes and related needs create opportunities for investors (e.g. water scarcity, climate change, energy efficiency, financial services). Social or environmental benefits are fully blended into the value proposition of such Thematic investments and can be evaluated in both qualitative and quantitative terms.