The jointly developed tool, the Sustainable Investment Framework Navigator (SIFN), responds to a growing demand from investors, concerned about the ethical and sustainable aspect of their portfolios and enables asset managers to better consider the environmental and social impact of their investments. 

On the basis of common standards, the software is able to evaluate the investment portfolios and, consequently, steer direct managers and investors towards equities that comply with the ESG criteria. The SIFN is based on a set of six themes, namely climate stability, guaranteeing recourse, healthy ecosystems, basic needs, well-being and decent work.

"Measuring the impact on a company and on a specific theme is reasonably simple, provided the required data are disclosed. However, low data coverage, lack of familiarity with the underlying issues, and lack of standardisation make numbers and comparisons difficult. CISL’s framework offers a solution to this problem in the form of six simple quantitative tests based on readily available data," explains Dr Jake Reynolds, executive director for dustainable economy at the University of Cambridge Institute for Sustainability Leadership. 

"Together with our customers we have been waiting for this moment for many years. Measuring the ESG impact of the funds was like walking in thick fog. Finally, with this tool, I get the impression that we are coming out of the mist and that a new and clear day is dawning. The tool is practical and can be used immediately: this is what makes it so different from other initiatives. We are proud to announce this truly important moment for asset management and we know that Luxembourg will benefit from this work with CISL,” says Chrystelle Veeckmans, head of asset management at KPMG Luxembourg.

In the works since 2014

Developed to help understand the impact of investments, the first phases of reflection around the software began in 2014. "It shows how simple the question is, but it’s a much longer and more complex answer," says Dr Jake Reynolds.

"While ESG criteria and commitment to ethical and sustainable finance have become priorities for many in the sector, the covid-19 pandemic has proven that greater consideration of these aspects is needed. The financial sector plays a key role. It is essential to measure the impact of investment decisions in order to correctly interpret the role of capital markets in the transition to a sustainable economy," explains Arjan de Draaijer, managing partner at KPMG Sustainability Netherlands. 

Ultimately, KPMG says the goal is to be able to assess all portfolios on a common basis, thus encouraging the move of capital towards more environmentally sustainable investments. 

This article was originally published in French on Paperjam.lu and edited ad translated for Delano.