{"id":804,"date":"2013-04-10T12:39:24","date_gmt":"2013-04-10T17:39:24","guid":{"rendered":"http:\/\/www.riverbendadvisors.com\/blog\/?p=804"},"modified":"2013-12-17T17:13:54","modified_gmt":"2013-12-17T22:13:54","slug":"impact-investing-panel","status":"publish","type":"post","link":"https:\/\/www.riverbendadvisors.com\/blog\/2013\/04\/impact-investing-panel\/","title":{"rendered":"Impact Investing Panel"},"content":{"rendered":"<p>I want to thank <b><a href=\"http:\/\/www.thegiin.org\/cgi-bin\/iowa\/aboutus\/team\/index.html#21\" title=\"Luther Ragin bio\" target=\"_blank\">Luther Ragin<\/a><\/b>, CEO of the Global Impact Investing Network; <b><a href=\"http:\/\/www.trilliuminvest.com\/staff\/management-team\/patsky-matthew\/\" title=\"Matt Patsky bio\" target=\"_blank\">Matt Patsky<\/a><\/b>, CEO of Trillium Asset Management; <b>Kyle Johnson<\/b>, Managing Director at Cambridge Associates and <b>Daniel Fireside<\/b>, Capital Coordinator for Equal Exchange for their participation at <a href=\"http:\/\/www.riverbendadvisors.com\/blog\/2013\/03\/bsas-impact-investing-panel-april-3rd\/\" title=\"BSAS Impact Investing Panel April 3rd\">our Impact Investing panel <\/a>last week.  <\/p>\n<p>Luther, Matt, Kyle and Daniel led an informative, engaging and spirited conversation with each other and the audience.  Even though I worked with them to plan the topics and flow for the panel, I can&#8217;t possibly capture the richness of the discussion in a short article.  Instead, I&#8217;ll highlight several points I took away from the conversation.  <\/p>\n<p>Begin with our working definition:<\/p>\n<p class=c><b>Impact investments<\/b> are investments made into companies, organizations, and funds with the intention of generating measurable social and environmental impacts while also earning a financial return.<\/span><\/p>\n<p><b>Impact investing is sizable, growing and surprisingly diverse.<\/b><\/p>\n<ul>\n<li><b>$8 billion<\/b> of impact investments was reported by 100 institutions in a 2012 survey.<\/li>\n<li>Those institutions planned <b>$9 billion<\/b> in 2013.<\/li>\n<li>Investments are being made globally, in developing <u>and<\/u> developed markets &#8211; they are as likely to support housing in under-served areas of the US as microfinance in sub-Saharan Africa.<\/li>\n<li>Virtually all asset classes are represented &#8211; public-traded equities, private equity, corporate and sovereign debt, cash, venture\/early stage capital, IPOs, DPO (direct public offerings) and others.<\/li>\n<li>This is not &#8220;disguised charity&#8221; &#8211; though financial return targets vary, 2\/3 of institutions report market rate of return targets.<\/li>\n<\/ul>\n<p><b>Investor intention is the foundational element in impact investing.<\/b> <\/p>\n<ul>\n<li>Investor intent distinguishes impact investing from an investment that happens to also have social or environmental impact.<\/li>\n<li>The investor&#8217;s impact goal will be value driven.<\/li>\n<li>The investor&#8217;s financial return goal should reflect financial and portfolio considerations but may be influenced by values.<\/li>\n<li>For investors to reach their overall financial goals, portfolio construction must take into account the specific impact investments chosen.<\/li>\n<\/ul>\n<p><b>The measurement of impact gives impact investment robustness and rigor.<\/b><\/p>\n<ul>\n<li>Defining &#8220;impact&#8221; and how to measure it is hard work, but essential.<\/li>\n<li>Measuring desired outcomes requires a higher level of transparency and accountability from the target organization.  That benefits financial analysis and reporting as well.<\/li>\n<li>Having agreed-upon impact measures better aligns the goals of investors and recipient organizations.<\/li>\n<\/ul>\n<p><b>Impact investing is not just another name for SRI, ESG, responsible investing or sustainable investing.<\/b><\/p>\n<ul>\n<li>Impact investing&#8217;s roots are in Socially Responsible Investing, which began as a passive strategy (avoid investing in bad things).  Impact investing is by definition active investing.<\/li>\n<li>There is significant commonality, crossover and confusion among these terms.  For the purposes of understanding impact investing, don&#8217;t equate them.<\/li>\n<li>These other terms encompass approaches and tools that are useful in choosing and evaluating impact investments.<\/li>\n<\/ul>\n<p><b>All investments have impact &#8211; the importance of a total portfolio view.<\/b><br \/>\n<figure id=\"attachment_818\" aria-describedby=\"caption-attachment-818\" style=\"width: 300px\" class=\"wp-caption alignleft\"><a href=\"http:\/\/www.riverbendadvisors.com\/blog\/wp-content\/uploads\/2013\/04\/trillium-tpa-approach.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.riverbendadvisors.com\/blog\/wp-content\/uploads\/2013\/04\/trillium-tpa-approach-300x225.png\" alt=\"\" title=\"trillium tpa approach\" width=\"300\" height=\"225\" class=\"size-medium wp-image-818\" srcset=\"https:\/\/www.riverbendadvisors.com\/blog\/wp-content\/uploads\/2013\/04\/trillium-tpa-approach-300x225.png 300w, https:\/\/www.riverbendadvisors.com\/blog\/wp-content\/uploads\/2013\/04\/trillium-tpa-approach.png 960w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><figcaption id=\"caption-attachment-818\" class=\"wp-caption-text\">Courtesy Trillium Asset Management<\/figcaption><\/figure>\n<ul>\n<li>The businesses and governments that deploy invested capital have impacts &#8211; positive and negative &#8211; on the impact goals of investors.\n<li>For most investors, even the most committed ones, impact investments will only represent a fraction of their portfolio.  Investors must consider whether the rest of their portfolio is helping or hindering their impact goals.  <\/li>\n<li>ESG\/SRI criteria, shareholder advocacy and public policy advocacy are also tools to influence the impact of investments.  The accompanying chart illustrates how Trillium uses these tools to maximize impact.<\/li>\n<\/ul>\n<p><br CLEAR=\"ALL\"\/><\/p>\n<p><b>Impact investing complements the emergence of alternative models for business organizations.<\/b><br \/>\n<figure id=\"attachment_822\" aria-describedby=\"caption-attachment-822\" style=\"width: 300px\" class=\"wp-caption alignright\">\n<a href=\"http:\/\/www.riverbendadvisors.com\/blog\/wp-content\/uploads\/2013\/04\/Equal-Exchange-10year-return.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.riverbendadvisors.com\/blog\/wp-content\/uploads\/2013\/04\/Equal-Exchange-10year-return-300x225.png\" alt=\"\" title=\"Equal Exchange 10year return\" width=\"300\" height=\"225\" class=\"size-medium wp-image-822\" srcset=\"https:\/\/www.riverbendadvisors.com\/blog\/wp-content\/uploads\/2013\/04\/Equal-Exchange-10year-return-300x225.png 300w, https:\/\/www.riverbendadvisors.com\/blog\/wp-content\/uploads\/2013\/04\/Equal-Exchange-10year-return.png 960w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><br \/>\n<figcaption id=\"caption-attachment-822\" class=\"wp-caption-text\">Courtesy Equal Exchange<\/figcaption><\/figure>\n<ul>\n<li><b>Equal Exchange<\/b>, represented on the panel by Daniel Fireside, is just one example.<\/li>\n<ul>\n<li>Organized as a cooperative, it has impact investors who own non-voting shares.<\/li>\n<li>Investors receive a fixed (5%) dividend when the company earns profits.<\/li>\n<li>Equal Exchange has been successful in achieving its goal of supporting small-scale farmers while earning a return.  Over the 10 years from 2001-11, shareholders outperformed the S&#038;P 500 with significantly less volatility.<\/li>\n<li>Closely engaging their investors in their business is a key to success in attracting and retaining investors and capital.<\/li>\n<\/ul>\n<li>Impact investments can be designed to support organizational structures like cooperatives, B-corporations, social benefit corporations and others.<\/li>\n<\/ul>\n<\/ul>\n<p><br clear=\"left\"\/><\/p>\n<p>For additional information:<\/p>\n<ul>\n<li><a href=\"http:\/\/www.thegiin.org\" target=\"_blank\">GIIN<\/a> &#8211; the Global Impact Investing Network<\/li>\n<li><a href=\"http:\/\/www.trilliuminvest.com\/news-articles-category\/thinking-capital\/new-white-paper-total-portfolio-activation-a-framework-for-creating-social-and-environmental-impact-across-asset-classes\/\" target=\"_blank\">White paper<\/a> on Total Porfolio Activation from Trillium Asset Management<\/li>\n<li><a href=\"http:\/\/equalexchange.coop\" target=\"_blank\">Equal Exchange<\/a> cooperative<\/li>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Takeaways from our Impact Investing panel.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,63,99],"tags":[],"class_list":["post-804","post","type-post","status-publish","format-standard","hentry","category-finance","category-investments","category-sustainable-investing","","tg-column-two"],"_links":{"self":[{"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/804","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=804"}],"version-history":[{"count":41,"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/804\/revisions"}],"predecessor-version":[{"id":1535,"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/804\/revisions\/1535"}],"wp:attachment":[{"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=804"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=804"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=804"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}