Norms | Investment ClassificationThe overall impact of a portfolio can be classified by considering the type of impact that the underlying enterprises/assets are having on people and the planet (the A, B or C), together with the strategies an investor uses to contribute to impact.


A growing number of investors are motivated to manage the effects of their investment portfolios on people and the planet. These investors vary widely in their intentions and constraints. For example, a passive retail investor looking to mitigate risk by avoiding harmful activities is likely to construct a different investment portfolio to a foundation using its entire capital base to advance its charitable mission. Different again is an institutional investor’s portfolio that anchors new investment products addressing social issues in its clients’ communities.

To align their portfolios with their intentions, all investors need to be able to understand the impacts of the assets or investment products/funds available to them. In addition, the intermediary investment managers and the assets seeking investment want to identify aligned investors and avoid being compared inappropriately to assets with different impact intentions, or avoid being judged on just financial performance alone.

Impact classes group investments with similar impact characteristics based on their impact performance data (or, in the case of new investments, their impact goals). Impact classes bring together the impact performance (or goals) of the assets being invested in (x-axis) and the strategies that the investor uses to contribute to that impact (y-axis). They can be used to define boundaries within which comparisons of impact performance are likely to be possible and sensible.

Impact classes are not intended as a replacement for progress towards a global performance measurement standard that could enable the impact of individual investments to be compared. Instead, impact classes offer an immediate and complementary solution for differentiating the type of impact that investments have, even when very different measurement approaches are used.

The matrix below illustrates the range of impact classes currently identified in the market. Much like financial asset classes, these impact classes – represented by each box on this matrix – are an equivalent shorthand for conveying whether the impact characteristics of an investment opportunity match an investor’s impact intentions and constraints.

Classification Based on Goals and/or Performance

Investments can be classified on the Matrix in two ways:

  • An investment’s (or portfolio of investments) impact goals. For most investors this will involve selecting one or two impact classes which align with the impact they expect or intend to contribute to through their portfolio. For other investors the range of the strategy could be broader and cover multiple impact classes. Where possible, investors are encouraged to indicate what proportion of assets-under-management they expect to allocate into each impact class, noting allocation thresholds where they exist.
  • An investment’s (or portfolio of investments) actual performance. When plotting the actual impact of investments on the matrix, investors are encouraged to indicate what proportion of assets-under-management is allocated into which impact class(es). To be transparent, and ease impact management decisions for their stakeholders, investors should display this information alongside their original goals. Where relevant and possible, investors can then explain to their stakeholders where and why performance might differ from the original goals.


There are several reasons performance might differ from goals, including:

  • Market availability of the type of investments sought.
  • Performance differing from expectation for individual enterprises.
  • Gaining a better understanding of what type of impact was most needed by a population or geography throughout the investment period and shifting goals accordingly to address this need.
  • Gaining a better understanding of what type of investment strategy is most effective at delivering against certain impact goals and shifting strategy accordingly to address this need.
  • An impact risk materializing. As risk isn’t factored into the matrix impact classes, if a risk materializes the impact occurring may be different to the original goal.
  • Finding that the impact of the portfolio is not classifiable on the matrix, perhaps because data is not available to ensure that negative effects are being mitigated, or perhaps because market distortion is occurring – e.g., flexible capital is provided for investments where it is not required.

The Guide to Impact Classification provides step-by-step guidance for classifying your investments using whatever impact data – qualitative and/or quantitative – is available from your underlying assets.

PGGM’s Investor’s Impact Matrix:
Mapping the €220B portfolio of a pension fund

PGGM, with a total of €220 billion of assets under management, is the manager of the second biggest pension fund in the Netherlands, PFZW, alongside other smaller pension funds. In working with the IMP, PGGM sought to more accurately understand and communicate what impact their investments are making, and precisely what their role has been in the process.
The results, along with insights PGGM gained along the way, are showcased in this case study report. We learned:

  • The effects of 12% of PGGM’s portfolio cannot be classified at all, due to the nature of the asset class and/or the almost total absence of data.
  • 81% of PGGM’s portfolio businesses is categorized as ‘acting to avoid harm’. Please note that, in the absence of high-quality and granular data, this classification rests on the assumption that these investments respond effectively to the various instruments (exclusions, engagement, ESG integration) that PGGM wields to minimize negative impact.
  • 4.5% of the portfolio provides general ‘benefits to people and/or the planet’ through PGGM’s Investing in Solutions (BiO) program, which targets investments with measurable impact that relate to several SDGs.
  • Also through the BiO program, about 2.5% of the portfolio is classified as ‘contributing to solutions’ – aimed at making a significant contribution to positive outcomes for specific target groups or causes that are underserved, including climate and pollution.
Learn Impact Management Norms