Social Stock Exchange Family Office Conference, 2017
In mid-May, around two hundred delegates attended the Social Stock Exchange’s second family office conference for impact investing and in the space of just twelve short months, it was clear that the conversation had moved on immeasurably. The 2016 event was led by concern amongst intermediaries that the pool of available impact investments wasn’t sufficiently deep, but as the conference 2017 conference title suggested, times are changing – and the mindset as to how to achieve impact is evolving, too. As the opening speaker, Damian Payiatakis, Head of Impact Investing at Barclays put it, a growing band of investors are no longer taking an agnostic approach when it comes to investing – and with it are focusing on so much more than just the return.
So what about those concerns over the perceived shortfall in available impact product? Bonny Landers, Head of Sustainable, Responsible and Impact Investment at Sandaire Investment Office engaged the audience by recounting an interesting tale of working with a large family office out of Asia. Many family members simply weren’t engaged when it came to running the foundation. Using a classic investment spectrum, the wealth generators – octogenarian parents – were more than happy to go out and hunt the very highest returns then share the wealth on a philanthropic basis, but this absence of interest in what the money was actually doing to generate the wealth was, to put it bluntly, switching the trustees off. Varying degrees of impact can be found across the spectrum (below) and this approach really does illustrate why it should never be suggested that the available supply of impact investments is constrained.
Social Stock Exchange member firm Debate Mate then provided the audience with a lively discussion – held understandably in a classic debate format. With a motion of ‘this house believes that private investment has a greater social impact than public investment’, the arguments flowed at a pace, covering facts including how private companies had few shareholders to convince when it came to delivering an impact versus the potential for public companies to deploy at scale. Both sides put forward compelling cases but when it came to an audience vote – and it was very close – the opposition won, underlining the significant role that both PLCs and private companies can provide in ensuring their activities deliver a positive impact as well as shareholder returns.
Case studies from Thrive Renewables and Oikocredit then illustrated first hand that businesseswhich deliver positive social or environmental impacts are indeed hugely popular as investments. Thrive is reportedly the UK’s most widely held renewable energy company, with more unique shareholders than any of its competitors. Similarly, Oikcredit, with a legacy dating back over four decades, pioneered the concept of the triple bottom line and has seen its objective of tacking issues rather than waiting for a crisis as resonating very clearly with investors across Europe.
UBS Wealth Management’s Chief Investment Officer for Ultra High Net Worth Individuals, Simon Smiles, then picked up proceedings, outlining the challenges his bank faces in convincing investors to get over the misnomer that just because an investment delivers impact, the return must be impaired. There’s a growing weight of evidence to prove this isn’t the case, from generating better long term returns to investments having lower levels of volatility, so the UBS mission is focusing around projecting this message to the majority who aren’t yet investing for impact – there’s a financial argument for doing this which extends well beyond considerations of the absolute return.
The panel discussion of how to align assets with values and moderated by Robert Rubinstein of TBLI Group offered yet more insight of the challenges faced by those advocating the virtues of impact investing. Mr Rubinstein summed up the mindset of those quick to dismiss impact as essentially being interested in dying rich – but as quickly as possible, much to the amusement of the audience. The question was posed as to who is blocking the growth of impact investing – advisers tell a story that their clients don’t want it, whereas investors all too often say they don’t know enough about the genre. One issue cited here was the bad communication of results, a fact which was supported by comments from Stephen Brenninkmeijer, founder and principal of Willows Investment, who was keen to urge those investing for impact to learn from the mistakes as well as sharing the news of success. Louise Kooy-Henckel, the Investment Director of Wellington Management added that this needs to be a democratic movement – impact investing must be available to the general public to gain better traction. Arguably there’s a trickle-up benefit to be seen here, too, for those High New Worth investors still wondering if this is the right step to take.
Two further case studies concluded proceedings, with Social Stock Exchange member ET Index providing insight as to the direct relationship between global warming and portfolio values. The company currently helps investors understand and manage the carbon and climate related risks of their portfolios – something that is being extended to cover other areas of impact, too. The session then wrapped up with Laurence Kemball-Cook of Pavegen illustrating just how much kinetic energy his paving flags can generate. Laurence ensured the highly charged session finished on a memorable note by asking the audience to all jump on the count of three. Had this been harnessed, it would have been sufficient to generate enough power to light a street for one hour – a perfect example of impact in action.
So it seems that we can make a difference through impact investing. We’re not there yet in terms of the breadth of product offering, but the mindset is changing and investors need to keep the pressure on banks, advisers and intermediaries alike to include more impact objectives in a portfolio. This shift in terms of what constitutes impact is also significant and going back to Bonny Landers’ investment spectrum, every pound, dollar or euro that’s invested – beit not at the far right hand end of that scale – is again a step in the right direction. The global investment landscape is changing – we just need to make sure everyone is willing to embrace that change.
Watch a short video of the Family Offices Conference: