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May 30, 2018

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Allocating to Impact Investments - how this looks in reality

November 2, 2018

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Impact Investing Goes Broad! - Reading Emerson's New Book

January 7, 2018

Happy New Year! May 2018 be your most rewarding, exciting and happy one yet!

 

Over the holiday period, I had the pleasure of reading Jed Emerson's new book - his third, and one whose message is important and timely in my view - pushing for impact investing as a philosophy, rather than a specific tool, and offering a comprehensive, step-by-step discussion of actual implementation of this principle across an overall investment portfolio (for a new launch or otherwise).

 

For those of you who are new to the space, Emerson is the originator of the "blended value" approach, whose key premise is that social or environmental impact should be considered on the same terms as economic or financial returns, as do risks. My discussion below compares this new book to his 2014 publication, The Impact Investor, which presents in-depth analysis on established impact investors - who they are, where they invest in, how these factors influence the actual investments - and sketches out the landscape of this burgeoning industry.

 

Much like its predecessor, this book differentiates with its real-life applicability, even as most of the material on the topic remains theoretical. Where The Impact Investor is focused on actual practitioners, however, The ImpactAssets Handbook is targeted at new entrants who may wish to introduce impact analysis as an additional consideration to traditional risk/reward analysis.

 

Broad adoption of impact investing principles is crucial to the further takeoff of this space from here. Recognising that all investments yield an impact beyond financial return enables an alignment of all related divisions of impact investing, e.g. Sustainable & Responsible Investing funds as the "impact alternative" to traditional pension or mutual funds for public listed markets, and Venture Philanthropy to Angel Investing within the startup investing phase. Uniting subdivisions refocus efforts on the goal, helps move discussion beyond definitions and measurements, and expands the scope for creative solutions.

 

In fact, in recent discussions with an impact investment advisor, he noted that high net worth clients are increasingly moving towards this "total portfolio management" approach. For a high profile, real-like example, one simply has to consider today's headlines on Apple investors pressuring the co on children's iPhone use. Shareholder activism has historically been focused on improving financial returns from large cap investments, and today's welcome news of shareholders recognising a company's community impact is further sign that impact investing is entering the mainstream. 

 

Emerson's book is a welcome urge for investors to ACT NOW!

 

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