Christoph Klein: The Need for Better Impact Measuring
This week, our TTI Interview Series covers TTIer Christoph Klein. Christoph (CFA, CEFA) is the founder & managing partner of ESG Portfolio Management. His professional experience spans across having been a Credit Portfolio Manager at Deutsche Bank and Deutsche Asset Management, Credit Hedge Funds Manager at Credaris and Tripoint, Head of Non-Financial Credit, Head of ESG Credit, Senior Multi-Asset Manager, MD at Deutsche Asset Management and Partner and Portfolio Manager at nordlX AG.
In this interview, Christoph talks about the necessity of a clear and precise measurement of impact that can be aligned globally. He argues that companies with measurable positive impact should deliver higher returns with lower risk.
Christoph Klein: The Need for Better Impact Measuring
ESG quality and positive SDG impact
Christoph, tell us a little about your work and how it intersects with the impact space.
ESG Portfolio Management selects companies with highest ESG quality and positive SDG impact (especially renewable energy, education, healthy food and climate protection). We engage actively with management teams to improve weaker dimensions and further enhance their SDG impact. I am an active member of CFA, DVFA and teach the ESG seminars for Moody's Analytics globally.
Sustainably improving the lives of stakeholders
What would you say is your own definition of “impact”?
“Impact” is to improve the lives of as many stakeholders as possible. The actions need to be sustainable, and thus helpful for many generations to come.
Global calculation of alignments to the EU taxonomy
Based on your experience, Christoph, what is an important issue that needs to be solved over the next 10 years?
There should be an independent, high-quality institution that calculates the EU taxonomy alignment for all companies globally. This would lead to a better understanding by the overall population and a level playing field for market participants. The EU taxonomy should also include social factors and goals, as soon as possible.
Measuring Impact
What do you think are some of the biggest challenges in the impact space (standing in the way of providing solutions faster)?
We need better tools to measure impact. The underlying methodologies should be discussed and checked. The results should be clear and specific, so that every interested stakeholder (also retail investors) can understand the outcomes.
Measurable impact, high returns and lower risk
Through your work, what misconceptions have you noticed regarding what
“impact” is all about?
On the one side, some asset managers claim impact when they cannot measure or prove it (which can be referred to as ‘rainbow washing’). On the other side, some academics demand proof of additionality and want impact projects to have lower yields (otherwise they would be financed by the market). I disagree with both!
