Sustainable Outcome Investing

Sustainable Outcome Investing is a public-market approach where financial and sustainability-related objectives are considered together, with a focus on the environmental and social outcomes generated by the products and services companies provide.

What is Sustainable Outcome Investing?

Sustainable Outcome Investing sits within the sustainable investing spectrum of capital, where financial and sustainability-related objectives are considered together. Unlike approaches that incorporate sustainability factors primarily to manage risk, Sustainable Outcome Investing focuses on the outcomes generated by companies’ products and services.

Three concepts underpin the framework:

Asset contribution

The degree to which a company’s products and services may contribute to environmental and social outcomes

Intentionality

An explicit statement of intent to target a specific sustainability-related objective alongside a financial objective

Measurement

Quantifying outcomes to verify that the intended objective is being achieved

Where Sustainable Outcome Investing sits on the spectrum of capital

Investors’ approaches to sustainability may vary, from those that incorporate sustainability factors into investment decision-making to those that seek to generate measurable impact. Sustainable Outcome Investing occupies a distinct position on this spectrum.

Sustainable Outcome Investing is designed for public markets, where demonstrating investor additionality (i.e., additional impact generated by the investor’s actions) presents a fundamental challenge, as Sustainable Outcome Investing focuses on the outcomes generated by the assets themselves.

Figure 1: The sustainable investing capital spectrum

Approach	Traditional	Sustainable	Sustainable Outcome Investing	Impact
			Financial First	Impact First
Financial Goals	Competitive risk-adjusted financial returns			May accept lower risk-adjusted financial returns to achieve impact goals
Sustainable Goals		Avoid harm and benefit stakeholders Avoid or reduce negative outcomes to people or planet
			Contribute to solutions Focus on generating positive sustainable outcomes
Intentions	“I am aware of potential negative impact, but do not try to mitigate it.”	“I want to behave responsibly.” “I want businesses to run and operate in a sustainable manner.”	“I want to help tackle climate change.” “I want to help tackle the education gap.” “I want to reduce inequality.”
Source: State Street Investment Management’s interpretation of Impact Investing Institute’s Spectrum of Capital, modified to meet State Street Investment Management’s guidelines. Utilises Impact Frontiers ABC Framework and Bridges Spectrum of Capital.

Identifying sustainable outcome investments

Our Sustainable Outcome Investing framework applies a set of data driven criteria to identify companies whose products and services may contribute to targeted sustainability-related outcomes. This includes:

Asset contribution key performance indicators (KPIs)

Identifying and quantifying the degree to which a company’s products and services may contribute to a sustainability-related outcome.

Theory of change alignment

Each KPI is mapped to a specific step in a theory of change, linking the KPI to the pathway through which a company’s activities may lead to the intended outcome.

UN Sustainable Development Goal (SDG) mapping

KPIs are mapped to the SDGs and their underlying targets to validate the use of those KPIs and to facilitate targeted SDG alignment for specific objectives.

Explore Sustainable Outcome Investing Research

Mapping the Sustainable Investing Spectrum of Capital

This analysis maps the sustainable investing spectrum, clarifying how the prioritization of financial and sustainability goals can shape portfolio construction.

Impact Investing vs Sustainable Outcome Investing

Defines impact investing and introduces Sustainable Outcome Investing (SOI), a distinct framework for targeting real-world outcomes in public market portfolios.

Identifying Sustainable Outcome Investments

Identify investments that may contribute to sustainable outcomes with KPIs, theory of change, and UN SDG alignment in a structured, evidence-based approach.

Important Risk Disclosures

Marketing Communication

For institutional / professional investors use only.

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The returns on a portfolio of securities which exclude companies that do not meet the portfolio's sustainable strategy criteria may trail the returns on a portfolio of securities which include such companies. A portfolio's sustainable strategy criteria may result in the portfolio investing in industry sectors or securities which underperform the market as a whole.

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The performance data quoted represents past performance. Past performance does not guarantee future results.

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