Measuring the Impact: A Survey of Impact Metrics in Environmental Real Asset Investing

Abstract

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.