Post-investment Strategies for Impact Investing

Mathieu Joubrel

Chapter 16 in Sustainable Investing:Problems and Solutions, 2024, pp 421-450 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This chapter provides a comprehensive guide to post-investment strategies for impact investing tailored for sustainable investment professionals. Engagement and stewardship are pivotal post-investment strategies to steer companies toward sustainable practices that align with investors’ environmental, social, and governance (ESG) goals. They encompass active dialogue with company management, exercising voting rights, and participating in collaborative initiatives. We also introduce tools and metrics for measuring ESG performance improvements, such as ESG ratings and monitoring of ESG controversies, and explore the use of advanced analytics to assess the real-world extra-financial impact of portfolio companies. We discuss the inherent risks and opportunities in post-investment strategies, including company resistance, resource constraints, and the potential for short-termism. Conversely, there are numerous opportunities in influencing corporate behavior, enhancing long-term value creation, and aligning investments with broader societal and environmental objectives. By effectively understanding and implementing these strategies, asset managers can contribute to the transition toward a more sustainable future while meeting their clients’ financial and extra-financial objectives.

Keywords: Sustainable Investing; Impact Investing; Corporate Social Responsibility; Materiality; Externalities; Sustainability; ESG; ESG Funds; ESG Factors; ESG Scores; SASB; SDG; DEI; Private Equity; General Partners; Active Ownership; Investment Stewardship; Machine Learning; Natural Language Processing; Large Language Models; Transition Economy; Climate Risk; Net-zero Investing; Divestment; Greenhouse Gas Emissions; Scope 3 Emissions; Modern Portfolio Theory; Venture Investments; Carbon Dioxide Removal; Carbon Credits; Fuel Production; Portfolio Management; Market Sentiment; Factor Investing; Portfolio Optimization; Post-investment Management; Digital Transformation; Fixed Income; Portfolio Performance Measures (search for similar items in EconPapers)
Date: 2024
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