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Investing for Global Impact, how finance can help change the world
More and more wealthy families care about our Planet. Data emerged from the Investing for Global Impact prove this.
Do the world’s wealthy families only aim to get richer? It might be true in some cases but luckily awareness levels have changed over the years. And millionaires are increasingly trying to use their money to change the world for the better. The Investing for Global Impact report proves this.
What is Investing for Global Impact
Investing for Global Impact 2017 is a report by the Financial Times written in collaboration with GIST (Global Impact Solutions Today) and supported by the UK’s Barclays bank. The fourth edition of the report was presented in March in Paris, France. The study is one of a kind as it assesses two macro areas: impact investing, i.e. investments that generate financial return alongside a positive, measurable impact on people and the Planet; and philanthropy, i.e. charitable activities that – contrary to investments – are non-refundable.
Who took part in the research
The research also stands out for the choice of interviewees. While similar studies usually involve banks, pension funds or insurance companies, Investing for Global Impact focuses on those who manage wealthy families’ assets: foundations and family offices. Foundations are widespread globally but family offices are established mainly in the United States. They’re service companies that manage the assets of one or more wealthy families (in this case they’re called multi-family offices or multi-client family offices). On the one hand they provide advice in the financial, fiscal and philanthropic fields, while on the other hand they manage investments and accounting. They can be independent companies or owned by big banks.
A total of 246 respondents from 45 countries were included in the survey, 35 per cent more than in the previous edition. For the first time researchers took a number of family offices and foundations that aren’t currently involved in impact investing and philanthropy into consideration, in order to comprehend their choices and assess future developments.
Impact investing is an established reality
Some hopeful signs emerge from the Investing for Global Impact report. The investment decisions of wealthy families appear to be more frequently influenced by non-financial factors such as CSR (Corporate Social Responsibility) and ESG (Environmental, Social and Governance criteria). Generally, impact investing is thought to be a more efficient choice compared to philanthropy. Also, it is no longer an exception but an integral part of wealthy families’ investment portfolios just like any other financial instrument. This isn’t an obvious fact as impact investing is the latest “arrival” in the large family of sustainable investments. And in some ways, it is the most advanced and innovative strategy.
For many years the greatest obstacle to sustainable investments has been the fear of sacrificing returns. But this belief has been proven wrong by facts. This year 90 per cent of family offices and foundations achieved positive financial returns as a result of impact investing, in line with market rates. Also, 75 per cent of cases have met or exceeded expectations. 88 per cent of interviewees confirm this trend also in terms of social returns.
Featured image © Spencer Platt/Getty Images
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