Affirmative Investment Management: a thriving business and a winning strategy

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Global manager AIM aims to solve global problems by mobilizing traditional capital for impact.

Affirmative Investment Management (AIM) is a dedicated specialist in impact fixed income securities.

The vision is to raise capital to address the great challenges facing the world. The firm focuses on managing portfolios that generate overall returns as well as environmental and social impact.

Based primarily in London, with colleagues in Australia and Japan, AIM manages over $1.2 billion in assets for clients around the world.

AIM promotes transparency, measurement and communication of impact, which includes ongoing monitoring of product usage and reporting, ensuring that investors are fully aware of how their capital is being invested. This results in detailed annual impact reports for all funds and portfolios.

AIM’s business is aligned with how the company itself invests. Its sustainability structure is based on four key pillars: people, climate, customers and community. This reaffirms commitments such as aligning business, portfolios and operations with the Paris targets to limit global warming to 1.5°C, including net GHG emissions by 2050. AIM’s annual corporate sustainability report clearly sets out the company’s goals and progress.

AIM applies a three-step investment process: verification, portfolio management, measurement and reporting.

The SPECTRUM process

SSUSTAINABLE — Aligned with the SDGs and the Paris Agreement on climate change.
PPOSITIVE EXTERNALITIES — Positive environmental and/or social externality associated with the issue.
EETHICS and ISSUER CONDUCT — Issuers must have appropriate governance, policy and operational conduct.
VSREDIT — Issuers must be financially solvent.
JRANSPARENT — Clear and transparent investment reporting and disclosure policies and processes.
RRESPONSIBLE ISSUER — Issuers must demonstrate integrity and high ESG standards, as well as a clear commitment to a sustainable model.
youPRODUCT SE — Ability to determine product usage within the transmitter to ensure AIM criteria are met.
MMEASURABLE IMPACT — All securities must offer traditional market returns and provide reports of material and measurable environmental and social impacts.

Verification encompasses sustainability and credit assessments and is a crucial first step in defining the investment universe. AIM’s verification process, called SPECTRUM, combines positive screening for impact and an assessment of environmental, social and governance risks across a range of criteria at issuer and issue level. The result is a SPECTRUM-approved universe of green, social and sustainability bonds, labeled and unlabeled. Each bond has a measurable environmental and/or social impact.

The portfolio management team only manages portfolios for risk-adjusted returns relative to traditional benchmarks.

The final step in the AIM investment process is proof of financial returns and impact. An essential part of the company’s philosophy is transparency for investors. Clients can monitor the impact of their investments annually through reports that detail the weighted portfolio usage of product allocation across sectors and geographies. There is also an independent assessment of greenhouse gas (GHG) footprints (Scope 1, 2 and 3), savings and alignment with the United Nations Sustainable Development Goals (SDGs).

In 2020, AIM’s global portfolios funded over 2,551 projects in 165 countries (75% of nations). Some 189,219 tonnes of GHG emissions were prevented from escaping into the atmosphere each year, a savings of 64%.

By collecting impact data internally and working with issuers, AIM consistently achieves coverage rates of over 90% for all portfolios. In 2021, AIM carried out 170 missions with issuers. In line with its philosophy, AIM is transparent about methodology, seeking standardization in impact reporting.

AIM also produces quarterly reports, which include sample profiles on owned issuers and issuance.

The calculation methodologies are described in the appendix to the reports, and AIM worked on the carbon yield methodology in 2016, in partnership with ISS-ESG and Lion’s Head Global with funding from the Rockefeller Foundation.

AIM continues to innovate to deliver meaningful insights and reports. This year it will report for the first time on net zero alignment at the project level, alongside emissions analysis. The sustainability team engages with issuers and has led thematic engagement on issuers’ net zero commitments across all sectors. The result of this analysis will be presented in the AIM impact report.

AIM’s EU funds fall under Article 9 of the EU Sustainable Financial Disclosure Regulation (SFDR), the highest possible sustainability categorization. Although not required until 2023, AIM is incorporating some SFDR metrics into this year’s impact report, reporting on the negative impacts of the portfolios as well as the positive and social impact achieved.


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