– Guest writer: Sue May Talbot
As BlackRock CEO Larry Fink outlined in a letter to CEOs last year, it’s no longer acceptable for a business to operate solely for profit — purpose is becoming paramount. And his message is resonating: the global impact investing market is expected to reach $307-billion by 2020. A recent study published by MaRS and SVX found that 90 per cent of the high-net-worth individuals surveyed were interested in becoming impact investors, and 47 per cent intended to increase their allocation of assets toward impact investing in the coming year.
A growing and powerful bloc of impact investors is made up of women, for whom the concept of investing with purpose already resonates. By 2020, women are expected to hold 32 per cent of global wealth and by 2024, women will hold of about 50 per cent of Canadian wealth. In a global survey by the Centre for Talent Innovation, 90 per cent of women said making a positive impact on society is important when considering investment decisions.
I work with a large number of female clients who want their investments positioned in a way that helps support positive change and makes a positive difference environmentally and socially. Here are some of the most common questions they ask.
How is impact measured?
Because impact investing is experiencing a surge in popularity, there is a lot of noise out there from companies claiming to be impact investments, particularly those that are geared toward women and wellness. Many companies that have altruistic intentions come to find that they aren’t having the impact they intended. For example, TOMS shoes initially made a splash with its buy-one, give-one model, but came to discover that gifting shoes to people in developing countries was disrupting local economies and creating dependencies, and not affecting the root causes of poverty.
One way savvy female investors are able to measure the true impact of their investments is to use the United Nations Sustainable Development Goals (UN SDGs), which the UN developed as a roadmap to creating a better and more sustainable future for all. They address the global challenges we face, with a focus on poverty, inequality, climate and environmental degradation, prosperity, and peace and justice. All but a few of the 17 SDGs are investable.
How are women represented?
Boards and executive teams dominated by older white men are slowly but gradually going the way of the dinosaur, less slowly in the impact investing space. Female impact investors are keen to see women represented in a company’s leadership, and in many cases to know that women and girls are among those benefiting from its work. This is not to say that they avoid companies with male CEOs working in industries that don’t on the surface improve outcomes for women and girls — many male-led companies have boards that are 50% female, or more. Crossroads International is in a sweet spot of having both an all-female board and a mission focused on women and girls.
Am I sacrificing returns for impact?
Impact investing does not mean sacrificing potential returns. While past performance is not a guaranteed predictor of future success, results of our firm’s historical back tests show that impact portfolios can perform as well as, and in some cases better than traditional portfolios. Female impact investors can be confident that they no longer have to decide between impact and returns— they can invest in such a way that’s aligned with their values, and see strong competitive returns by doing so.
There is a wealth of impact investing information available at the MaRS Centre for Impact Investing (my firm recently partnered with MaRS SVX to launch the Genus SVX Impact Investment Counsel) and in our own Introduction to Impact Investing.
By Sue May Talbot, Partner at Genus Capital