Increasing the positive impact of all investments: Helping fund managers walk the walk.

Sep 13 2021 · 5 minute read

Impact investing is gaining momentum, and it couldn’t come at a more pressing time. Covid-19 has disproportionally affected the most vulnerable in society. As investors, how do we know that our money is doing good? And more importantly, how can we use our influence to ensure it does do good and to maximise our impact?

At Snowball, we believe that all investments create impact, whether positive or negative, and this impact can be social or environmental. Snowball wants to move to a financial system that puts positive impact on a par with financial returns for all investments.

Any effort to make investments work harder for society should be applauded, but the fact that there is still no consistent framework to measure and assess the impact of an investment is proving a real obstacle for fund managers that are trying to make a difference.

Our Investment Analyst, Jake Levy, wrote a guest blog for NPC to share details of Snowball’s recently published report, Managing for Impact — what we have learnt and what comes next, to which NPC contributed. NPC has a dedicated impact investing team which helps clients across the world to understand the impact they are creating throughout the investment process.

Managing for Impact
Image description: shows the front page of Snowball’s report Managing for Impact

Snowball’s approach

Snowball’s proprietary impact measurement framework seeks to help solve some of these obstacles. It assesses fund managers against five categories: mission and behaviours (what drives the organisation and how determined it is to live those values), impact process (the impact thesis and how impact is measured), active ownership (how each manager supports and engages with their investees to improve outcomes), catalytic (whether the fund manager is acting as a pioneer on impact), and impact risk management (the management of the risks around investing for impact). We provide further information on each of these categories on page five of our report here. This framework builds on, and learns from, the work of others, such as the work done by NPC with the KL Felicitas Foundation, the Impact Management Project, and the Operating Principles for Impact Management, developed by the International Finance Corporation.

But we are looking to go further. We will do this by placing particular emphasis on the mission, behaviour and values of our managers. We therefore invest in the most impactful funds, being run by managers dedicated to improving their own impact as well as that of their underlying investments. We are looking for impact focussed pioneers that walk the walk, that take their stewardship responsibilities seriously, and want to grow the impact investing market because it is the future of investment and not just another product offering.

We recently conducted a survey to assess our managers’ impact against our framework and we shared the findings in a report published in September 2020. The results are striking, they showed that impact mission and intent are important to our managers, but it can be tough to put this into action.

Working towards best practice

We feel there’s scope for improvement and there are a number of measures we would like to see implemented across the industry. A commitment to impact leadership at all levels is crucial, as is having protection in place against mission drift. This means defending the fund’s social and environment mission from the risk that, over time, the fund might seek to maximise financial returns at the expense of impact. This can be achieved through an asset lock or by having a commitment to the mission included in the articles of association.

Many of our managers, such as Resonance and Big Issue Invest, are already certified B Corps, businesses that meet the highest standards of verified social and environmental performance, and we encourage others to follow (Snowball itself is awaiting B Corps certification).

Better reporting in the industry is also necessary. It is not uncommon for managers not to report on impact beyond their own investor base and many lack a self-critical eye and are not open about their learnings. Impact reporting typically lacks the rigour of financial reporting, with impact reports often resembling a marketing document rather than a considered analysis of impact which can help drive better decision-making.

We believe that transparency is crucial to ensuring accountability, and to informing and engaging those within and outside the sector. Without it, we will not understand the true impact of our investments and, in the worst case, ‘greenwashing’ and ‘impact-washing’ can proliferate. One of our public equity managers, WHEB, is committed to ‘radical transparency’ in its sustainability fund and publishes all of its investment advisory committee minutes on its website. This is exactly what we have in mind.

In contrast, another manager refused our request to see a copy of their advisory committee minutes citing ‘compliance issues.’ We therefore need to build a shared understanding of what transparency and accountability really means. This is a challenge to the industry as a whole, asset owners and asset managers alike, as well as the organisations delivering the impact.

Where next?

Impact investing is still in its relative infancy and our learning is still evolving. At Snowball, we hope our report sparks debate and contributes to the ongoing conversation around impact investing. Over time, we would like to see investors and managers coalesce around accepted best impact practice. Ultimately, we hope this leads to improvement amongst managers and measurably increased positive impact on the ground.

We know it is our job as investors to support our managers on that journey, but we must hold them accountable too. Only then can we hope to work towards a world where all investments account for their social and environmental impact.

If you would like to learn more about Snowball’s report, Managing for Impact — what we have learnt and what comes next, then get in touch with them on

Jake Levy, Investment Manager and Impact Lead at Snowball
Jake Levy, Investment Manager and Impact Lead at Snowball