Get an impact fund – save the world?

  • Impact investing: a new strategy for overcoming environmental challenges
  • The EU disclosure regulation creates more transparency with regard to sustainability risks and effects in financial investment products
  • For everything about impact investing, greenwashing, and interviews with experts, please kindly read our ESGenius newsletter

Impact investments are currently hot property in the financial sector. Impact funds are investments that are meant to generate positive, measurable social and environmental effects in addition to financial return. The growing impact investment market is channelling capital towards the most pressing challenges in areas such as renewable energy, climate protection, microfinance, and affordable and accessible basic services such as housing, healthcare, and education.

Impact funds – the “icing on the cake” of the sustainable investment industry

“For a long time, it was left to the fund companies to judge whether a fund was an impact fund or not. On the upside, it allowed them to create innovative, new products; but on the downside, the chance to potentially greenwash investments opened up to free riders,” says Walter Hatak, Head of Sustainable Investments at Austrian fund company Erste Asset Management (Erste AM). The disclosure regulation of the European Union, which came into force at the beginning of March 2021, establishes new transparency rules with regard to the results of sustainability risks in financial investment products and their negative effects. Put simply, the goal of article 9 funds contained therein is to generate not only performance, but also a positive effect, i.e. a positive impact on society.

The impact must be measurable and visible

We at Erste AM subject our impact funds to an annual impact screening by external sources. In it, the impact the assets invested in the fund have had over the year is assessed. In order for us to be able to report a positive impact, the selection of the right assets is crucial. This may be the shares of companies that offer solutions against climate change, or, in the fixed-income segment, green bonds or climate awareness bonds that fulfil our sustainability criteria. “Impact does not necessarily mean environmental topics; social issues like job creation in developing countries through micro loans also play an important role for Erste AM,” says Hatak.

There are many ways to achieve the impact goal

A positive impact can be achieved in different ways. Erste AM uses all available sustainability tools, on the one hand through the fund products themselves, on the other hand through the exercise of voting rights and corporate dialogues.

ERSTE GREEN INVEST provides capital to those companies whose business model engages with the combat against climate change and which use natural resources such as water as efficiently as possible. ERSTE RESPONSIBLE BOND GLOBAL IMPACT focuses on green bonds, climate awareness bonds, and social bonds, which specifically invest in projects that are meant to conserve a liveable planet for future generations. ERSTE RESPONSIBLE MICROFINANCE provides capital for the founding of companies and thus the creation of jobs where no other source of finance would be accessible.

By exercising voting rights, submitting shareholder motions for environmental and social issues and engaging in dialogues with investors, asset managers can exert pressure on companies. This also comes with a positive effect outside the remit of impact funds. In 2020, Erste AM exercised voting rights at 363 AGMs on behalf of more than EUR 3bn worth of assets.

And the other funds have no impact?

“From our point of view, every investment decision has an impact that should be measured regardless of the product line. For this reason, we were the first fund company in Austria to join the Montréal Carbon Pledge and to publish the carbon footprint of all mutual funds on our website every year,” says Hatak. It fills us with pride that we have consistently been below the overall market average in terms of CO2 emissions since the beginning of measurements, not the least due to our minimum standards implemented across the company. In addition, we have also published our water risks since 2017 in our sustainable equity funds and have expanded the calculations to include fixed income funds for the first time this year.

Even if we manage to reduce emissions drastically, the water tap will still be on and water will continue to fill the bathtub until it spills over one day. “Climate neutrality therefore has to be the declared goal. With impact funds we can invest in those companies and projects that contribute decisively to turning off the water tap once and for all,” concludes Hatak.

Read everything about impact investing, greenwashing, and interviews with experts on the topic in our ESGenius newsletter here: https://blog.en.erste-am.com/dossier/impact-investing/

Info

ERSTE GREEN INVEST is an impact fund that invests in sustainable companies in renewable energy or, for example, water management. The fund also supports companies that assume a pioneering role in the transformation of environmentally harmful processes of the Old Economy.

About us

Erste Asset Management manages assets worth EUR 82.88bn (August 2024). About 100 investment professionals across numerous countries work in the Investment department of Erste Asset Management. In order to ensure an optimised management process, the Erste Asset Management fund managers cooperate closely with our in-house Research department.

Erste Asset Management was awarded the title of Best Investment Company of the Year by Austrian trade magazine “Börsianer” in 2019.

Disclaimer and legal notes

For enquiries, please contact:
Communications & Digital Marketing

Paul Severin
Tel. +43 (0)50 100 19982
E-Mail: paul.severin@erste-am.com



Erste Asset Management GmbH

Am Belvedere 1, A-1100 Wien
www.erste-am.com
Sitz Wien, FN 102018b,
Handelsgericht Wien, DVR 0468703


 

Disclaimer

This document is an advertisement. Please refer to the prospectus of the UCITS or to the Information for Investors pursuant to Art 21 AIFMG of the alternative investment fund and the Key Information Document before making any final investment decisions. All data is sourced from Erste Asset Management GmbH, unless indicated otherwise. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to Art 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in connection with the InvFG 2011.

The fund prospectus, Information for Investors pursuant to Art 21 AIFMG, and the Key Information Document can be viewed in their latest versions at the  website www.erste-am.com within the section mandatory publications  or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the Key Information Document is available, and any additional locations where the documents can be obtained can be viewed on the website www.erste-am.com. A summary of investor rights is available in German and English on the website www.erste-am.com/investor-rights as well as at the domicile of the management company.

The management company can decide to revoke the arrangements it has made for the distribution of unit certificates abroad, taking into account the regulatory requirements.

Detailed information on the risks potentially associated with the investment can be found in the fund prospectus or Information for investors pursuant to Art 21 AIFMG of the respective fund. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund. Please note that investments in securities entail risks in addition to the opportunities presented here. The value of shares and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your shares. Persons who are interested in purchasing shares in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision.

Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to Art 21 AIFMG for restrictions on the sale of fund shares to American or Russian citizens. Misprints and errors excepted.

The public sale of shares in the specified fund in Germany was registered with the Federal Financial Supervisory Authority, Bonn, pursuant to the German Kapitalanlagegesetzbuch (KAGB). The issue and redemption of unit certificates and the execution of payments to unit holders has been transferred to the Fund's custodian bank/depositary, Erste Group Bank AG, Am Belvedere 1, 1100 Vienna, Austria. Redemption requests can be submitted by investors to their custodian bank, which will forward them to the Custodian Bank/Depositary of the Fund for execution via the usual banking channels. All payments to investors are also processed via the usual banking clearing channel with the investor's custodian bank.. In Germany, the issue and return prices of shares are published in electronic form on the website www.erste-am.com (and also at www.fundinfo.com). Any other information for Shareholders is published in the Bundesanzeiger, Cologne.

Presentations:

It is expressly noted that presentations shall not be construed as providing investment advice or investment recommendations; presentations simply represent the current market opinion. The presentations are not intended as sales instruments and shall therefore not be construed as an offer to buy or sell financial or investment instruments. The investor shall be solely responsible for any and all decisions that he makes on the basis of this presentation.