The bar is rising for fund managers’ impact performance data: potential investors are starting to ask for independent audits on impact performance, in addition to the usual questions around its measurement and management, CBRE Investment Management reports.

CBRE IM has reached £500 million ($601 million; €567.6 million) of capital raised for its open-end UK affordable housing impact fund. New commitments from Tyne and Wear Pension Fund and Scottish Borders Council Pension Fund pushed the fund over the line this week. The fund provides capital for the development of new affordable housing stock in the UK.

“When we’re pitching for new money, investors are coming to us and asking, ‘How do you measure impact? How do you report it? And how is it audited?’” fund manager Andrew Davey told New Private Markets. Claims about impact “just don’t wash any more… if you can’t illustrate that [the fund] has been independently audited and don’t have that clear audit trail. It’s a bit like saying to an investor, ‘Just trust me on the returns.’”

When CBRE IM launched its UK impact strategy in 2018, its goal was to help alleviate the shortage of affordable, social and low-cost housing supplies in the UK, said Davey. “The provision of affordable housing has been below government targets and the level required [by UK residents] for decades. As part of our impact thesis, we want to make sure that the assets that we hold remain affordable for the long term.”

CBRE IM does not measure impact only by units delivered. “We have around 50 [impact] metrics which we report against to our investors, similar to how we would with our total [financial] returns,” said Davey. These metrics include affordability (the lower the rent as a proportion of average wage in the local area, the higher the score); distance of assets to amenities; assets’ energy performance; and the proportion of assets in the portfolio located in the UK’s 40 percent most deprived areas.

These results are audited by The Good Economy, a UK impact advisory firm specialising in local and place-based sustainability. “We need our impact framework to be a hundred percent robust – as robust as if we’re reporting total [financial] return,” said Davey. “As a fund manager, I’m quite happy to open my books on the fund [to an auditor] because I’m quite happy to shout about the stats that we’re generating.”

Other investors in CBRE IM’s UK Affordable Housing Impact Fund include the public pension funds for Bedfordshire, Devon County Council, Hampshire County Council, London Borough of Greenwich, Rhondda Cynon Taf, Surrey County and Wiltshire.