Aligning Your Values with Your Investments? Top 5 Emerging Impact Investing Trends

September 14, 2017

 

1. Engaging boards of public companies to effect change.

As a stockholder, investors can engage with the board of directors to make their voice heard. It’s referred to as being an “active owner” and is a powerful way to influence public corporations. Just ask the board of Exxon Mobil. At their last annual meeting in May, 62% of shareholders went against management’s recommendation and called for the company to produce an annual assessment of the long-term business impact of global climate change policies.

2. Utilizing the “Female Factor.”

Gender lens investing is one of the fastest growing impact investment approaches. All investors have access to a growing number of products focused on women in leadership. And the best part is that research suggests investors can earn very competitive returns. Don’t believe me? Click the hyperlinks for research on how gender diversity on corporate boards may increase firm value, lower default risk and lead to superior performance.

3. Shifting from negative to positive screening.

The evolution from negative screening to positive screening has jolted investors looking to align values with investments. Negative screening is the outright exclusion of an industry or stock from ones’ portfolio, whereas positive screening uses environmental, social and governance (ESG) data to tilt toward companies that are more environmentally friendly, socially aware and have better governance attributes. And did we mention that positive screens can be utilized without sacrificing returns? Read here, here and here.

4. Targeting impact with private equity.

Some of the most innovative investment solutions meant to generate market returns and measurable impact are happening in private equity markets. For individuals who have the means and can withstand the risk, investments made to support renewable energy, cancer research, sustainable agriculture and/or education are growing in popularity.

5. Pricing in the risk of climate change.

Academics and investment managers have been trying to assess the impact of climate change on investment portfolios. Authors of Climate Risks and Market Efficiency took an innovative approach. They analyzed the impact of droughts on food companies and concluded that investors fail to appreciate the true impact of climate change, presenting investment opportunities for those who can model such risks.

We are here to help investors align values with investments. If you have any questions, don’t hesitate to email Top5@glenmede.com or contact Laura LaRosa, Executive Director of Client Development, at Laura.LaRosa@glenmede.com

Glenmede’s Top 5 is intended to be an unconstrained review of matters of possible interest to Glenmede Trust Company clients and friends and is not intended as personalized investment, estate planning, tax or legal advice. Investment and wealth advice depends on many individual facts and circumstances we cannot account for here. For legal and tax advice, consult your lawyer or accountant. Opinions or projections herein are based on information available at the time of publication and may change thereafter. Information gathered from other sources is assumed to be reliable, but accuracy is not guaranteed. Outcomes (including performance) may differ materially from expectations herein due to various risks and uncertainties. Any reference to risk management or risk control does not imply that risk can be eliminated. All investments have risk. Please contact your Glenmede representative to discuss the applicability of any matter discussed herein.