Each of our recommended reads focuses on a current topical discussion point within the investment and wealth management sector, aiming to share some of the most notable observations.
This month, we are looking at Socially Responsible Investing (SRI), impact and sustainability. Industry trends show that their value and importance to investors across the board is changing and below we have collated a number of valuable insights in this regard.
Whilst SRI assets in the US have been ‘growing at nearly 40% year-over-year since 2016’, corporations are failing to react to this increased demand, according to CNBC. Almost every large US corporation and high-value business is making advances in sustainability and SRI work, but many are not reporting it effectively – missing out on a substantial sector of the investment community looking to focus on assets that have a sense of social purpose.
SRI isn’t a new trend, but it does seem to be gathering momentum and as such we would expect listed companies to make more of their corporate social responsibility (CSR) going forward – in turn providing more SRI investing opportunities in the coming future.
Giving back and using accrued wealth from investments to support organisations, charities and NGOs is important for society. But in this modern age, philanthropy isn’t the only positive impact form of investment.
In April, Citywire reported that Maya Prahbu, head of wealth advisory, EMEA, at JP Morgan Private Bank noted ‘people are carving out some of their grant money to do some soft impact investing…that could have a social and environmental impact, as well as a return.’
Where philanthropic investing is likely to remain a key staple to succession planning, we are seeing, particularly in the next generation, a shift towards SRI. This article investigates how the sense of responsibility in investors is changing and whether philanthropic investing and SRI can co-exist.
One of the newer investment opportunities for those diversifying from philanthropy, is within women focused initiatives. In this article from Forbes, Devon Thorpe examines the evolving nature of impact investing, speaking with 50 thought-leaders and key practitioners in the sector, to better understand how it is changing. He pulls together 11 trends that are currently being observed.
One of the primary trends in the development of impact investing is women, such as female-led groups and businesses around the world. In addition, Thorpe notes trends in alternative deal structures, micro and SME investments and developing markets. Whilst he states clearly that these may be US biased at the time of writing, it shows that impact investment opportunities are broad and varied – offering food for thought for those looking to broaden their SRI portfolio.
Matthew Brown, Head of Portfolio Management at Thorntons Investments, discusses in The Scotsman the growing interest in ‘ethical investing’ and its subjective nature. In looking at how investors might find a worthy cause for their investments, he considers the highly personalised nature of seeking avenues that reflect individual beliefs, and to what extent profit and loss factors into decision making. He also considers the benefits of charitable trusts and intergenerational wealth planning.
Bloomberg looks at new findings from investment advisory firm, Mercer LLC, and their report which ‘marks one of the first attempts to model sector-specific investment risks from climate change over decades.’ Their findings illustrate how climate change will affect coal, infrastructure and renewables investments, among others and to what degree. Now is an important time for asset analysis and this is a wake up call for many investors.
Next: More Recommended Reads By Topic
Our recommended reads series collects the important and interesting articles from across the wealth management and investment sector, collating them by area of investment or kind of investor. You can learn more about how investment trends are changing and which streams are being utilised by checking back regularly.
Alternatively, to discuss investment opportunities with a member of the Wren Investment Office team, you can contact us by phone or email.
Why not check out our Recommended Reads for Family Offices next?