The Global Impact Investing Network (GIIN) defines impact investing as, “…investments made with the intention of generating a positive, measurable social and environmental impact, alongside a financial return.”
Until recently, this investment approach was largely confined to private equity. However, in recent years, impact investing has evolved and expanded to include listed securities. This asset class offers investors an accessible way to generate a positive social and/or environmental impact alongside attractive and stable long-term financial returns. Indeed, the scope of listed equities is huge, and an impact investment approach which also encompasses active, engaged ownership, has excellent potential to create positive change.
To ensure that UBP’s approach meets the most stringent impact criteria, the Bank has formalised its governance arrangements in this area by setting up two dedicated entities, the Impact Advisory Board and the Impact Investment Committee.
The Impact Advisory Board is chaired by Anne Rotman de Picciotto, a member of UBP’s Board of Directors. Its role is to take thought leadership drawn from external experts in fields outside of investment management and embed it into the Bank’s impact platform. The Board meets every six months to review the impact case behind companies held in UBP’s impact investment solutions. The Impact Advisory Board’s external sustainability experts are:
The Impact Investment Committee is in charge of developing the Bank’s impact investing capabilities, while also incorporating industry best practice. Chaired by Simon Pickard, the Committee includes Victoria Leggett (Head of Impact Investing), Rupert Welchman (Impact Portfolio Manager), Karine Jesiolowski (Head of Responsible Investment, Asset Management) and Didier Chan-Voc-Chun, (Head of Multi-Management and Fund Research).
“The climate emergency that we find ourselves in puts us in a stark position where we must explore all possible alternatives to reduce harm from the investments we make and, more importantly, to be intentional and conscious about how we allocate our private capital.”
As part of our continued commitment to sustainable wealth management for our clients, UBP has expanded its responsible investment expertise into impact investing. We are firmly of the view that the financial sector has an essential role to play in creating a sustainable economy.
Impact investing’s accessibility is key if we are to make a meaningful difference, and every investor must be able to reach their financial goals while upholding their values. Capital markets and listed equities have the potential to be huge engines of positive change, as they can boost the accessibility of impact investing to the general investing public.
The ever-increasing pressure to find innovative solutions and technologies which can allow humans and the planet to live in harmony is translating into strong investment inflows for the enablers of these goals. Identifying and supporting these companies is a key tenet of impact investing, as they should be best placed to grow faster and more profitably in the long term than the broader investment universe.
Increasingly, the United Nations’ 17 Sustainable Development Goals (SDGs) are being used as a roadmap for impact investing.
A cornerstone of impact investing is the measurement of non-financial performance, i.e. the impact an investment has alongside financial returns. This allows the end investor to have a much more complete picture of the performance of their holdings.
The best impact investment companies in the listed equity space are innovative and often disruptive businesses. To select the best candidates, UBP has developed its own methodology. This proprietary scoring system sits at the heart of the investment process, enabling our impact investment experts to assess the “impact intensity” of the companies under review. Each IMAP criterion is marked out of 5, giving a total score out of 20:
Impact investing is relatively new in the listed space. Engagement with companies is the most effective way to gain clarity on the true “intentionality” of a business. A constructive and honest relationship with a company’s management also provides the necessary encouragement and support for the company to deepen and broaden its measurement and disclosure of non-financial KPIs which are relevant to the investor. Engagement is embedded in every stage of the investment process, from the initial investigation of a company to the impact assessment.