HOW DID YOU GET INTO IMPACT INVESTING?
Early in my career, I worked with a socially responsible fund characterized by negative screening, which was originally designed primarily for faith-based investing. But it became clear to me that building scale and positive momentum in such an approach is challenging. While interest was quite broad, everyone has different values. Often cultural differences play a part: what is acceptable in one part of the world may not be acceptable in another. So the focus on excluding securities not particularly unifying in this respect. I contemplated a more modular approach, but the operational complexity was vast. It then morphed into a full-scale ESG integration project – the promotion of good corporate behaviour in investee companies. I learned something important about the opposite of exclusion – by focusing on positive outcomes and solutions, it was possible to unite people and capital and be inclusive. It was the opportunity to join Wellington’s Global Impact team which really lit this fire. To move beyond positive ESG characteristics to advancing an agenda of positive social and environmental change; to find investment opportunities that arise from linkages to large-scale social and economic problems; to have the chance to potentially influence and be a part of the enormous capital reallocation required to solve the some of the world’s biggest problems – all of this excites me. In many ways, my journey in the sustainable investing space reflects the evolution of the industry itself. Today, I focus almost entirely on impact advocacy and helping institutional investors and other asset owners to invest in ways that maximize their value alignment and investment strategy while fulfilling their fiduciary responsibility.
Having grown up in Denmark, I wasn’t exposed to the type of inequality we see in many parts of the world today. Basic life essentials are still lacking in so many places. Equal talent clearly doesn’t translate into equal opportunity. Fundamentally, I still perceive it as unfair. As a result, I am probably most motivated by social impact and raising awareness that many of the SDGs are connected. This interconnectivity is especially important as often the key to success in one goal involves tackling issues more commonly associated with another. This is also the case with the SDGs focused on the environment and climate. For impact investments to be successful and sustainable, these factors must be considered.
Beyond simply striving for an attractive financial return, impact investing has the purpose and intent to create positive change in society and the environment. It is inclusive. Every investment is underpinned by a theory of change or impact thesis that creates accountability and helps with evaluation and measurement. It is incredibly research and data-intensive, but the impact lens can unlock very interesting investment opportunities you wouldn’t necessarily come across if simply guided by traditional investing. Some even refer to impact investing as the “invisible heart” of financial markets. I quite like that…
Impact investing has the potential to unlock a substantial volume of private and public capital for social and environmental purposes around the globe, helping to solve big problems. Not only do I believe that it is the right thing to do, but it also has attractive return potential. But more education is needed, and I am focused on raising the profile of impact investing and providing strong advocacy. If I could make every trustee board see the true potential of this investment approach, I would be so happy! Meanwhile, I am working with many asset owners, and I’m pleased to see that impact investing is finally gaining more momentum.
Wellington Management is an investment management firm with client assets under management totalling over USD 1 trillion.
Disclaimer:
For professional or institutional investors only. Any views expressed are those of the author(s), are based on available information and are subject to change without notice. Individual portfolio management teams may hold different views and may make different investment decisions for different clients.