So there’s a growing conversation here in Canada about the Impact Investing market and recently Advisor.ca published an article that I sense helps deal with some of the misconceptions of what this growing field is really about.
In the article, they highlight through an interview with Geoffrey Moore, Co-founder and CEO of TBC Capital Inc., that impact investesting operates on the basic premise of solving social and environmental issues while generating financial profit. In a similar vein to ESG integration, it requires the management of social and enviromental performance along with financial risks and returns.
Moore hightlights however that “it takes a more proactive approach than traditional socially responsible investment and is drivn by a growing realization that governments and community organizations simply cannot, on their own, address the major environmental and social challenges of our time”.
The article goes on to quote a recent JP Morgan and Rockefeller Foundation paper “Impact Investing – An Emerging Asset Class” by saying “impact investing is indeed rapidly growing; the early days of an industry building up around it is taking place and according to JP Morgan’s definition is in the in the process of establishing all of the characteristics of an emerging asset class.”
Interesting that here in Canada, the Canadian Task Force on Social Finance has recently made a recommendation that a 10% minimum allocation of mission-related investments be made by all Canadian foundations over the next decade. Moore believes “this would create demand for several billion dollars worth of impact investing and will provide a case study into how asset allocation models evolve over the coming years”.
But is this for everyone? Obviously the first rule of investments is “Know your client” and Moore underlines “it is always about the client: advisors and consultants know their clients. There is a spectrum of impact investment solutions addressing various risk appetites depending on the focus on financial returns versus desired social impacts.”
Sounds like we’ll being hearing more about this sector in the coming years!
To learn more, here are the links to the article, the JP Morgan/Rockefeller paper, the Task Force paper and a link to TBC’s website.