Browsing by Author "Kent, Xander"

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Open Access
Environmental Impact Investing in Real Assets: What Environmental Measures Do Fund Managers Consider?
(2017-06-30) Spence, Liz; Copp, Belton; Kent, Xander; Vermeer, Dan; Doyle, Martin
As concerns over climate change and natural resource depletion grow, investors have begun seeking opportunities for generating both market-rate financial returns and quantifiable environmental gains. Investing with the objectives of social or environmental return is often referred to as impact investing. Measuring and reporting the environmental impact of such investing is becoming of greater interest to environmental managers and investors. This report presents findings from interviews of investment fund managers of environmental real assets—defined here as real assets that rely on ecological systems to generate cash flows (e.g., timber, agriculture, fisheries, water rights). The interviews reveal little consistency in how environmental returns are measured and reported. Importantly, most of the environmental metrics are not designed to allow for evaluation of funds’ environmental performance. Hence, investors are unable to distinguish among funds in terms of environmental returns. Moreover, investors are also generally uninterested in such information. In short, impact investors seek environmental impact funds so long as they have risk-adjusted, market-rate returns regardless of environmental performance. To better evaluate the environmental returns of impact investments, whether real assets or other types of investments, fund managers and investors should directly engage the environmental science and operations management community. That community could offer insights to help ensure that investments are delivering and reporting on promise and that capital is being steered toward effective projects and opportunities.
Open Access
Measuring the Impact: A Survey of Impact Metrics in Environmental Real Asset Investing
(2016-04-28) Copp, Belton VI; Kent, Xander; Spence, Liz
Private investment in environmental real assets has increased over the past decade due to their low correlation with financial markets, inflationary hedge benefits, and connection to impact investing. As investment funds begin to manage these assets, concerns arise over environmental accounting practices. To better understand which impact metrics funds currently use and what motivates measurement, we interviewed 19 fund managers from environmental real assets funds. Results revealed that current impact metrics schemes are disparate within and between asset types. Funds are motivated to collect environmental data by internal and external drivers, including voluntary certifications, regulations, and investor requirements. If environmental accounting is to mature, fund managers, investors, wealth advisors and environmental professionals must align expectations of metrics and reporting.