Ethical Investing  

The rise of impact investing

This article is part of
Guide to ethical investing

The firm’s headquarters which is based in London already uses 100 per cent renewable electricity.

Maarten Slendebroek, chief executive at Jupiter, said in a statement: “We believe our decision to target 100 per cent renewable electricity through RE100 highlights the alignment between our corporate strategy and our investment activities.

“As long-term active investors, we believe that climate change and energy transition carry risks and opportunities that warrant our attention. This initiative demonstrates Jupiter’s commitment to environmentally responsible corporate behaviour.”

Amanda Young, head of responsible investment at Aberdeen Standard Investments, observes: “The world faces a number of environmental and social challenges. The rise in technology and access to information has made these challenges very much part of public awareness.  

“People can now find out exactly where companies operate, the impact business has on the environment, how companies treat local communities and what affect business operations have on their employees. Companies cannot operate in isolation.”

This applies to asset management groups as well, of course.

Doing good

Impact investing is increasingly being adopted by responsible investors who seek to achieve positive social and environmental change while achieving a financial return, according to Perry Rudd, head of ethical research at Rathbone Greenbank Investments.

“This is often characterised as enabling investors to ‘do good while doing well’,” he notes. 

“Under this broad category, there are a number of more specialised approaches, including social investment, impact-first investment (where social return takes precedence over financial return) and social enterprise investment. These approaches can be applied across different asset classes, including equity, venture capital, debt and fixed income.”

He suggests: “As fiscal constraints make it increasingly difficult for governments to meet the funding requirements necessary to address the world’s most urgent challenges, impact investing is viewed as one of the potential sources of capital for under-resourced sectors such as social housing, healthcare and education. 

“In addition, it can also be used to support sectors providing environmental solutions or mitigating the damaging effects of climate change such as renewable energy, protection of natural capital and sustainable agriculture.”

Impact investing has been far more prevalent in the institutional investor space so far, but there are signs this is becoming a strategy more familiar to retail investors.

Matt Christensen, global head of responsible investment at Axa Investment Managers, admits it will take time for the market to mature and expand to the retail segment.