Responsible investment has moved firmly into the mainstream over the past decade as investors have realised that investing with principles does not mean sacrificing returns.
During this time the focus has been very much on ESG considerations, assessing information on companies' internal practices. Now, in our view, it is the turn of impact.
Over the coming decade, investors will be assessed not only on the financial return they deliver but also on their societal outcome; the impact they have.
In becoming mainstream, impact will have to be scaled up and move from a niche capability to a way of investment that can be deployed in core portfolios across the main asset classes, from equities to private equity.
Work together for the greater good: Pushing the industry towards a more purposeful capitalism and fiduciary duty
Impact has the potential to reveal deep shifts in industries and business models. In a period where companies need to justify their purpose, impact analysis allows us to assess if a company or a sector is adapting to the changes our world is facing. Good businesses are forward looking. Their impact on society will influence future cashflow and therefore their share price. So, an investor taking care of impact should generate a sound investment for clients.