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Press: Making Green, Greener. Smart ESG Optimiser Slashes Carbon, Water and Waste from Portfolios

Impact Cubed Smart ESG model portfolio enables significant improvement across 15 ESG factors, including carbon emissions, freshwater usage, and waste generation, alongside a substantial increase in revenues from environmentally beneficial activities.

LONDON, UK – June 12, 2023 – Impact Cubed, a pioneering ESG impact data and analytics provider, unveils Smart ESG – an innovative approach to creating sustainable investment portfolios. 

To demonstrate its effectiveness, an analysis found that if the $3B in AUM of the iShares MSCI World ESG Enhanced ETF were optimised by Smart ESG, there would be the equivalent to reduced water usage, waste generation and revenue from environmentally harmful activities, by as much as 80%. This translates to:

  1. 36,000 fewer tonnes of carbon emissions (scope 1-2) 

  2. 5 million cubic meters less freshwater usage—approximately 2,000 Olympic-sized swimming pools

  3. 230,000 fewer tonnes of waste generation, equal to the weight of about 115,000 small cars.

Furthermore, the equivalent of 7% more UN SDG environmentally positive revenue would be generated. These significant environmental improvements are delivered alongside superior impact performance across a total of 15 ESG factors compared to the iShares ETF, all while maintaining an annualised tracking error of only 1.2%.

“Our proprietary Smart ESG portfolio engine revolutionises investing by optimising multiple ESG factors simultaneously using outcome-oriented impact data. This results in not only enhanced and customisable ESG performance but also market-leading tracking error efficiency,” says Aston Chan, Head of Investment Solutions at Impact Cubed.

Chan concludes, “Asset owners and investment managers are increasingly demanding more ambitious ESG indices that align with their specific set of values. Smart ESG’s ability to deliver these differentiated, high-performing solutions significantly contributes to creating a more sustainable investment landscape.”

The launch of Smart ESG is accompanied by the release of Impact Cubed’s new white paper, ‘Smart ESG: A Revolutionary Approach to Sustainable Investing,‘ offering deeper insights into the Smart ESG portfolio engine and the evolving ESG investment landscape.

Figure 1: The % improvements across 15 ESG factors of a global equity Smart ESG portfolio vs iShares ETFs. Source: Impact Cubed online analytics platform, FE Fund Info

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