Profits, meet purpose. Companies are being asked to serve a social purpose, here’s how women are positioning impact investing as a mainstream strategy.
Leaders like BlackRock CEO Larry Fink have taken notice. In his annual letter to CEOs this year, Fink wrote: “Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.” Some on Wall Street say that Fink’s message sets a tipping point for the whole investment industry.
Demand is clearly growing for investments that factor in better environmental, social, or governance (ESG) performance, and statistics show they can deliver profits and long-term stability. The proof is in the figures: The MSCI KLD 400 Social Index, a capitalization-weighted index of 400 U.S. securities that provides exposure to companies with outstanding ESG, reports that its annualized returns (over a 20-year period ending January 31, 2018) were 5.46 percent, slightly better than the S&P 500’s 5.43 percent over the same period.
Certainly, it is hard not to find an investment firm that offers funds focused on companies engaged in such practices as promoting clean energy or creating a more inclusive workforce. And strong interest from women investors, particularly millennials, has the potential to add as much as $22 trillion to investments in conscious capitalism, according to estimates from the impact-investing firm Swell Investing. That would greatly increase the existing pool of nearly $9 trillion.
All of these strategies fall under the umbrella of sustainable investing or impact investing, though impact investing can also refer to projects or companies designed to produce a specific social impact on a large or small scale. Jessica Huang, director of sustainable investing at BlackRock in San Francisco, has another take, however: “Eventually, it won’t be called sustainable investing,” she says, “it will just be called investing, with ESG as a material driver of risk and returns.”
www.robbreport.com
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