Impact Investing - Kerr Financial
Financial Planning
Impact Investing
Category: Financial Planning, Investment Management Tags: integrated wealth management, investment management, Tax, wealth management

Making a Measurable Contribution to the World while Earning a Financial Return

The world of investing has significantly evolved over the past 20-30 years, with increasing emphasis now being placed on the achievement of multiple objectives when making investments.  Investors, and in particular private clients and foundations, are increasingly seeking investments that not only help them achieve their financial goals, but which are also aligned with their values and help them achieve their societal goals.  We think that this will be the new “normal” or the new ask from most clients within the next few years.  The key challenge for the wealth management industry is and will continue to be, how do we meet our clients’ needs?

Impact investing intentionally seeks both financial returns and social / environmental returns that can be measured

Impact investing or values-based investing is a somewhat new term and remains less-than-well understood.  It is often used interchangeably with the more well-known term, socially responsible investing.  We would point out, however, that while socially responsible investing is a necessary condition for impact investing, it is not a sufficient condition – impact investing goes beyond applying ESG (environmental, social and governance) criteria.  Impact investing intentionally seeks both financial returns and social / environmental returns that can be measured.  Socially responsible investing seeks a financial return too, but the social/environmental impact is not measured – the focus is on seeking investments that do no harm.

Incorporating impact investing into your investment portfolio

All of this sounds great but how does one incorporate impact investing into one’s investment portfolio?  There has been tremendous progress made in the development of impact investments over the past five years, but the majority of these investments are found in the private market, namely private debt/lending and private equity.  There is certainly no shortage of impact investments available globally but participation in impact investing requires much more research and analysis to find investments that align with one’s values and that are structured to achieve measurable outcomes.

Step 1 – identify and list your values

For anyone wanting to incorporate impact investing, the first step would be to list your values or societal issues that you consider important and identify 1-2 areas in which you would like to make a difference through your investments (not that dissimilar to identifying your philanthropic objectives – in fact, this could be viewed as an extension of your philanthropic goals).  This would then provide the basis for researching investments in line with your values.

As an example, if the sustainability of the environment and the food supply were two of your top societal issues, then you would start by seeking investments that embody these objectives.  You could begin by focusing first on responsible investments that are consistent with these objectives and then look for investments that also focus on measurable goals relating to these two areas.  An example of a responsible investment in the area of sustainability of the food supply is a farmland fund that is a signatory to the United Nations-supported Principles for Responsible Investments.  An example of an impact investment in the area of food supply sustainability is a private equity fund that invests in expansion-stage companies that promote health and sustainability in the food and agricultural sector.  With respect to environmental sustainability, there are various publicly available responsible investment options such as renewable energy mutual funds.  An example of an impact investment that focuses on environmental sustainability is a bond or a loan to help finance the development of a renewable energy project such as solar energy.

Talk with your advisor to determine how to incorporate a value based approach in your portfolio

Whether your interests lie with the environment, sustainable food production, education, eliminating poverty, health and well-being, reducing income inequality or one of the many societal issues facing our world, investment opportunities exist to earn a financial return and make a difference.  It is simply a matter of identifying it as a priority and talking to your Kerr advisor about how best to incorporate these investments into your portfolio.

RETURN TO HOME PAGE

Kerr Financial

About Kerr

Kerr Financial Group was formed in 1979 for the purpose of assisting individuals to maximize their personal financial resources, alleviate their financial and retirement concerns and simplify the administration of their affairs.

Resources & Articles


Montreal Office Kerr Financial
1000 Sherbrooke St. W, Suite 1600
Montreal, QC, H3A 3G4
Tel: (514) 871-8213
Fax: (514) 393-9516

Get Directions
Toronto Office Kerr Financial
150 York Street, Suite 1212
Toronto, ON, M5H 3S5
Tel: (416) 364-9447
Fax: (416) 364-0892

Get Directions