Have you thought about impact investing?
We as a society are becoming more and more aware of wanting to make the world a better, safer place to live. At CL4Women we are mindful that female investors in particular are increasingly concerned with how their money is invested and have a desire to create a legacy for their children and grandchildren in a responsible way.
That’s why we are delighted to have recently partnered with EQ Investors (EQ) who manage a range of Positive Impact Portfolios. We asked Damien Lardoux of EQ to summarise their approach to positive impact investing and how they are aiming to make a difference to our world.
The concept of impact investing is refreshingly simple. It’s an investment approach that aims to make a positive contribution to society or the environment, alongside an attractive financial return.
In recent years, this approach has become much more prevalent as people consider what the world will look like in the future. It’s turning out to be an appealing investment approach for anyone who is worried about how their money is used. A recent Morgan Stanley survey found that 71% of individual investors were interested in sustainable investing.
The positive impact approach
In response to this growing demand, EQ Investors (EQ) designed a unique investment strategy called Positive Impact. The best companies have always been the ones that innovate, find new ways to serve real needs and solve real problems, and we wanted to capture these investment opportunities.
The positive impact approach seeks out companies that create social, environmental and economic value (positive screening), whilst avoiding companies that are obviously harmful (negative screening).
The portfolios are also strongly contributing to the 17 UN Sustainable Development Goals (see below) which address the issues the UN sees as most challenging to our world between now and 2013.
Each portfolio is constructed from 15-20 funds. We build long term relationships with our fund managers and engage proactively with them on issues like those above.
The rapid growth of impact investing has been countered by concerns about simultaneously achieving social impact and market-rate returns. In our annual impact report, we present clear evidence to support our hypothesis that investing in companies making a positive impact should be good for returns. Whether you look at revenues or profits, companies held by the EQ Positive Impact Portfolios are growing significantly faster than the FTSE 100 companies.
Impact investing can be a great way to add diversification to your core portfolio. Within the EQ Positive Impact Portfolios, no fund is included based on its social or environmental credentials alone – it must also aim to deliver an attractive return for its sector of the market.
Impact investing has the added benefit of benefiting your children and their offspring. Many of the world's biggest problems – resource scarcity, clean energy, education, housing, urban transformations, require significant investment.
If the thought of impact investing has peaked your interest and you would like to further explore how your money could contribute to making the world a better place, please do not hesitate to get in touch with me and I will be happy to provide further information.