Green Assets Wallet: Tech-solution for single source impact reportingJanuary 21, 2022
Environmental Finance, supported by the IFC and the Green Bond Technical Assistance Program (GB-TAP), has published a report analyzing green bond fund impact reporting practices. The report focuses on current fund level reporting practices and green bond fund investor expectations.
In the report issuers and investors can read up on:
- Fund level impact reporting – a market summary
- What are the key challenges in producing fund level impact reports?
- Best practice tools: identifying data outliers, liaising with issuers, and methodologies for unifying disparate datasets, standards, and taxonomies
Three-quarters of investors say current impact reporting practices are ‘inadequate’.Environmental Finance Green Bond Funds Impact Reporting Practices 2021
Green Assets Wallet – impact intelligence from a single source
Green Assets Wallet is featured as a technology-driven solution to create a single source for issuers’ impact reports (p. 26) .
According to the report, larger green bond fund managers have committed resources to collect and analyze data for portfolio analysis and impact reporting. However, data collection is still a major barrier for smaller asset management firms with green bond funds.
Our survey also revealed a disconnect between the metrics that funds highlight in their impact reports and what specialist green bond investors want to see.Environmental Finance Green Bond Funds Impact Reporting Practices 2021
Months of work done in days
Even today, data collection is still done predominantly manually, consuming time and resources. A process that can take months.
2021 is seeing a shift in how data are collected. Investors are outsourcing the process of collecting data as well as impact reporting to increase efficiencies and align impact with their overarching investment strategies. More and more investors use external companies such as Green Assets Wallet to assist with preparation of their impact report (from 11% in 2020 to 17% in 2021). According to the report, “this underlines the growing complexity and resource requirements for funds to produce impact reports on their holdings.”
Green Assets Wallet impact dashboard is intuitive and allows impact calculations that would take months to be done quickly and efficiently. Investors can access trusted data, inform bond allocation choices and select high impact issuers and projects. The investor module offers a one-stop solution to reach their impact targets by harmonizing data and allowing for easy access and comparison. Portfolios can be created and impact calculated on framework level as well as project category (UoP) level. Investments can also be communicated in line with the sustainable development goals (SDGs).
Data collection is still a major barrier for smaller asset management firms with green bond funds.Environmental Finance Green Bond Funds Impact Reporting Practices 2021
Frequent engagement with issuers is still very much part of the data gathering process, with nine out of ten funds having lines of engagement with issuers to request impact data.
According to Environmental Finance, this engagement can be structured or ad hoc, and often part of their due diligence. This process usually begins pre-investment, followed by regular check-ins during impact reporting. Clear expectations in metrics used and reporting are being discussed with some investors requiring metrics down to project-level.
More than half the investors said poor data and impact reporting were deterring them from making further investments.Environmental Finance Green Bond Funds Impact Reporting Practices 2021
The report showcases that even on the widely used GHG emissions data there is little harmonization or consistency in terms of metrics reporting. This is because investors rely on issuers’ impact reports which vary substantially in the use of metrics and methodologies. With investments expanding into social bonds and sustainability labelled bonds impact calculations and communication are becoming even more difficult as of 2021.
If you are interested in learning more how to use Green Assets Wallet for your impact reporting, contact us.