EQ Investors builds process to track impact

Boutique wealth manager EQ Investors has developed a system to map the impact of its investments, amid growing investor demand

Boutique wealth manager EQ Investors is no longer relying on fund managers to measure the impact achieved by its portfolio of funds.

In its second annual Impact Report, the London-based boutique said it has built a new system over the past year to measure the impact of investments in its portfolio companies, using more than 100 social and environmental indicators.

In the report, published on Tuesday, the company said that it has spent the past year urging fund managers to review their exposure to companies which are “neutral” in terms of their impact on society or the environment.

“We think it is important to push for change,” the company said in the report. “At each meeting with fund managers, whether a current investment or potential candidate for the portfolios, we question the rationale for such ‘neutral’ companies and encourage them to review their investment and impact case.”

The company said that around half of the companies in which it invests are not yet disclosing the impact that their products and services have on the environment or society. Fund managers have been asked to underscore the significance of these data to investee companies.

Research contained within the EQ report suggested that companies within the wealth manager’s Positive Impact Portfolios have increased their operating profits faster than companies in the FTSE 100 index.

Between 2013 and 2017, it noted that portfolio company profits had increased by 63.9% while companies in the UK’s blue-chip index had only posted profit growth of 34.1%.

In a statement accompanying the report, Damien Lardoux, manager of the EQ Positive Impact Portfolios, said: “Within the portfolios, we have seen record levels of growth over the last 12 months. Increasing number of investors are interested not only in making superior returns, but also understanding the impact of their investments.”