Table of Contents

1.Introduction: Impact Investing in 2023

2.Family Offices and Impact Investing

3.Impact Funds

4.Media

5.Conclusion

  • Family Office Impact Investing Review 2023

    Family Office Impact Investing Review 2023
  • Family offices diversify their assets across various activities, spanning traditional investing, philanthropy, and impact investing. Impact investing stands out within this spectrum, representing a strategy and perspective that transcends financial gains. It enables investors to align a significant portion of their profit-oriented portfolio with their values. In Simple's 2023 review of impact and sustainable investing for family offices, we're diving into this dynamic landscape through the lens of a family office mindset, synthesising our insights into an easily accessible and practical, ready-to-use report.

    Impact
    Updated on April 29, 2024
    By David Struthers
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    1. Introduction: Impact Investing in 2023

    Impact investing intentionally deploys capital for transformational social and environmental change while generating financial returns for investors. The concept has matured since its first use in 2007. Today, impact investing is an investing framework with an extensive supporting ecosystem ranging from advisors and evaluation metrics to institutional investors and funds with network participants guiding the future.

    Impact investments take many forms. Around three-quarters of assets managed by respondents to a recent survey were allocated through direct investments in public and private markets with wide geographic spread. Private equity and private debt investments varied across regions, while energy, financial services, and healthcare were the leading sectors globally.

    The firms receiving the investments also vary considerably. A startup may be laser-focused on bringing an environmentally sustainable product or service offer to market. Another firm may centre their workplace practices, diversity, equity, and inclusion to drive inclusive economic growth. Many seek impact along their entire value chain and operations by targeting several UN Sustainable Development Goals (SDGs). The scale of impact ranges from households or small businesses benefiting from microfinance and firms focused on their immediate community to those seeking to create catalytic change across regions and globally. 

    Interest in impact investing is reflected in the assets allocated through this approach and the sector’s organisation. In 2022 the impact investing market reached USD 1.164 Trillion AUM. The remarkable growth and increasing maturity of the sector over the last decade and a half is also indicated by the growing organisational maturity of the space and increasing standardisation in impact measurements. While increasing capital is certainly encouraging, it is not the most important marker of success.

    “We should count success by the challenges solved, not by the dollars allocated,”
    Antony Bugg-Levine, Co-founder of the Global Impact Investing Network

    Family offices (FOs) are uniquely positioned to use their business acumen and patient capital to make impact investments in line with their values. The core family office mission of preserving and increasing wealth combined with attention to legacy and community all come together through impact investing. The best starting point for families seeking to answer questions about impact allocations and strategies are internal discussions about how to extend their values more fully through their financial activities.

    Family offices currently making impact investments typically maintain a portion of their portfolio as impact-first alongside ESG and traditional investments generating risk-adjusted market returns. Some family offices are impact-only and others range in their willingness to accept below-market returns for portions of their portfolio.

    The current macroeconomic climate, with higher interest rates and tighter credit, increases the importance of family offices stepping up to finance projects that banks or other funding sources may overlook. Higher interest rates, though, also incentivise the relative safety of fixed-income investments, perhaps testing commitments to impact investing allocations. While there is evidence that banks, foundations, and investment managers plan to reduce their impact allocations in 2023 from 2022 levels, family offices plan to increase their allocations.

    2023 Impact Investing Trends:

    • Investors are realising returns through diversified impact portfolios
    • Regulations against greenwashing
    • Impact investing is moving to the centre of family legacy and next-generation planning
    • Increased focus on diversity, equity and inclusion (DEI)
    • Continued mainstreaming of both ESG and impact investing

    One major finding from the 2023 GIINSIGHT is supporting evidence of the maturity of impact investing. There is now more room than ever for impact investors to diversify their impact investments across different asset classes, including public markets and public debt: “Investors are leveraging a wider range of asset classes and types of organisations to realise their impact investing strategies. Indeed, with public debt being the fastest-growing asset class deployed and the rapid growth in allocations to mature, publicly traded companies, impact investors are changing the investing landscape and demonstrating what is feasible and investible through impact strategies.” Diversification within the asset class should enable family offices to increase their allocations to impact in their portfolios.

    Greenwashing is making exaggerated or false claims about the sustainability of a product or service. The appeal of touting environmental credentials comes from the significant demand for increasing sustainability and green production. This demand and ESG metrics have increased expectations of transparency. Courts around the world, the EU, and the SEC are advancing regulation and enforcement. There have been hiccups along the way, but expect these actions to continue.

    Next-generation planning maintains its importance in many family offices around the world. Engaging the next generation through a clearly defined purpose is key to this process. Impact investing has the potential to move internal discussions into an actionable strategy.

    While some leading firms have prized diversity, equity, and inclusion (DEI) internally, investor interest is increasing. There are rubrics for evaluating DEI in potential investments in public and private markets. This trend, coupled with the continued mainstreaming of ESG, has kept these concerns top of mind and promises to continue for the foreseeable future.

    This review surveys the impact investing landscape from the perspective of family offices seeking to take their initial steps into this space or more experienced family offices looking to refine their approach or increase their portfolio allocation. Family offices take different approaches to their impact investments. They also connect to the broader impact ecosystem at different points of engagement depending on their internal expertise and capacity. The next section addresses four stages of family office impact investing: exploration, strategising, executing, and evaluating. Subsequent sections situate impact investing within the broader ethical investing spectrum and provide an overview of the impact investing ecosystem, especially relevant to family offices just starting down this path.

    Family Office Impact Investing Review 2023Stages of Engagement - Simple Impact Review 2023

    About the Authors

    David Struthers

    David Struthers

    Research Lead

    David Struthers is the research and technical report writer at Simple.

    Connect with David Struthers

    2. Family Offices and Impact Investing

    Beginning or continuing your family’s impact journey should centre internal conversations about your motivations, family legacy, and next-generation planning. Many family offices turn to impact investing to address the systemic challenges of inequality and climate change. In interviews with Simple, impact investing thought leaders noted that recent dramatic weather events around the world have been a gateway to impact investing for many family offices. 

    One of the most important considerations for family offices is that impact investing enables families to align a larger portion of their portfolio with their ethical and philanthropic priorities, generating returns and positive outcomes. For family offices already engaged in ESG investment screening, impact investing is an opportunity to move their investments farther along the spectrum of outcomes, past harm avoidance and to financing businesses creating innovative solutions to social and environmental challenges. Impact investing can also be a way to unite multi-generational family offices around a clear set of forward-looking values that define their legacy. The preservation of wealth for future generations and creating social and environmental good can go hand in hand by deploying their assets and influence to direct capital to meaningful uses.

    As asset owners, family offices have a range of resources to draw upon as they explore, plan, execute, and evaluate their impact investments. Many family offices forge their own impact investing paths. They leverage their business acumen and networks to fit a new orientation, and only selectively reach out to external stakeholders in the broader impact investing ecosystem. Other family offices bring on staff or connect with advisors to build their capacity. 

    It seems clear that the most impact can be made through direct investments, even though these can take many forms. Family offices have the resources to be the “patient” capital or to take the “first loss” in an innovative endeavour. They might also view their initial investment in a new sector as initiating an effort to “crowd in” capital to solve pressing social or environmental concerns. The multitude of approaches and entry points remind us that there is not one single correct impact strategy. Regardless of your family office’s path, the impact investing ecosystem is populated with a rich array of possible collaborators who can be engaged along your impact investing journey.

    Explore

    Exploring impacting investing at family offices often begins with internal conversations among family members. Family norms and the broader social environments of HNWIs shape their investing activities. A recent study found that the families of HNWIs tend to set profit-based norms when evaluating investment performance. Preserving wealth for future generations feeds scepticism about sustainable investing and impact investing when profit and ROI are the points of reference. Peer groups of active impact investors can form a community of values and provide the space to explore the rewards and paths to profitability for impact investing. A lesson for family members interested in impact investing to take away from this study, especially if facing scepticism, is to reach out and interact with peers already active in impact investing and participate in impact investing network activities early in your exploration process. Connecting your office to the resources available, including families, networks, and advisors, will build your knowledge and can ease your entry into the impact investing community.

    Another entry point into impact investing might come from examining your family office’s existing investment portfolio along Sustainable Development Goals (SDGs) or ESG criteria. Engaging with ESG rating providers can help you understand the impact of your current investments. ESG ratings and impact evaluation frameworks provide definable metrics to weigh along with financial accounting. This is an advantage when considering impact investing against demands for market returns.

    The Impact Management Platform formulated an ABC model classifying investments where the A’s Act to reduce harm, B’s Benefit stakeholders, and C’s Contribute to solutions. This can be used to start internal discussions about your current portfolio and to drive discussions about your family office’s impact investing ambitions. 

    Kusisami Hornberger identified six guiding principles for impact investing that are particularly relevant for family offices considering their activities in this space:

    • Seek financial health, not financial access.
    • Provide patient capital, not venture capital.
    • Be an impact-first investor, not an ESG investor.
    • Offer catalytic finance, not just blended finance.
    • Measure success based on results, not on activities.
    • Provide capacity building, not just capital.

    -Kusisami Hornberger, Scaling Impact: Finance and Investment for a Better World, p. 12 

    There is a strong synergy between formulating ambitions and classifying the current state of your investments. Viewing your portfolio through an established classification framework may help move discussions about ambitions from lofty abstractions to purposeful action.

    At the exploration stage, potential impact investors should also assess their risk tolerance, the impact area they want to focus on, and the potential for profit. Weighing all three factors accordingly, reaching out to knowledgeable advisors and networks, and evaluating current portfolios should provide enough information to smoothly transition to strategic entry into impact investing.

    Strategise

    Impact investing strategising should answer questions of focus area, portfolio allocations, risk tolerances, and expectations of returns. Some family offices turn to impact investing as part of a holistic approach that aligns their entire portfolio along ESG parameters. If this includes reallocating funds, capital gains taxes often come into play, increasing the importance of making strategic moves. Other family offices focus a smaller percentage of their assets on impact, hyperfocused on an area of deep interest. Once FOs are ready to identify investment opportunities and strategise their execution, they move to a terrain where most have significant expertise. 

    There are multiple directions that family offices might take to identify investment opportunities. On the more formal and organised side of the possible entry points, family offices that joined an impact investing network or attended impact investing gatherings might be connected to potential investment opportunities through these activities. Family offices might also reach out to investment managers, funds, or advisors that focus on impact investing. These stakeholders may offer services ranging from identifying investment opportunities, completing the necessary due diligence processes, and referencing evaluation metrics that fit the specific type of investment. Large funds play a role in shaping the impact investing market that family offices are joining.

    The point of entry into impact investing for many family offices comes as an outgrowth of their ongoing investing. Family offices actively making venture capital and private equity investments often have extensive networks in the startup and broader business communities in their region or sectors of interest. They probably also have internal staff and/or external partners to assist in evaluating potential direct investments. Shifting this knowledge and skill set to impact investing requires retooling to meet a new set of criteria. Basing decision-making on impact reports generated by firms seeking investment and engaging advisors or other stakeholders with expertise in impact investing for due diligence for specific investment opportunities will provide extended support beyond early-stage network engagement. The greatest impact comes from direct investments, rather than in listed equities, which increases the burden and possible reward for the engaged family office. It is crucial to determine success criteria at this stage and decide on the terms and conditions of potential investments.

    An important strategy consideration for all investing is risk-adjusted returns. This formulation is used across asset classes to compare rates of return in relationship with risk. Generally, the greater the risk, the greater the potential return. However, in impact investing, there is reason to rethink this logic. 

    “The relationship between returns and impact is not linear.”  -Ms. Patton Power

    Impact does not exist on a spectrum where increasing impact negatively impacts returns. Aunnie Patton Power, author of Adventure Finance, founder of Intelligent Impact, and a leading voice in the impact investing community argues that it is important to question assumptions about risk. Markets can misprice risk, especially involving new ideas or by reflecting broader preconceptions. For example, employee-owned firms are less likely to fail but often face higher lending rates. Investing in women entrepreneurs may be seen as more risky than men. Ms. Patton Power urges impact investors seeking to move the needle on crucial societal issues to be attuned to: 

    “separating real risk from the perceived risk of their investments.” 

    Family offices have the strength of independence and position to make this shift in their own operations and be leading voices in the broader investing community.

    Execute

    Executing impact investments is similar to traditional investing, although with different expectations and parameters. Family offices might choose different paths of continued active participation or be content to maintain a layer of separation between themselves and the investee, possibly through an intermediary. Making impact investments through a fund or with the assistance of dedicated impact investing advisors can reduce the burden on family offices. 

    Leading researchers on impact investing offer three main paths for executing impact investing. Family offices, especially those that continue to play active roles in family-owned firms, can have a special role in facilitating positive outcomes. First, impact investors can provide capital investments to established firms to direct new outcomes through specific projects. Second, impact investors can invest in firms established to generate positive social and/or environmental impact. Third, impact investors can push for change through post-investment actions such as voting and engagement. Execution strategies take distinct forms for each path and can involve different combinations of stakeholders in the ecosystem depending on the capacity and preferences of the family office. The common theme is working toward a shared outcome and maintaining shared expectations with stakeholders.

    Each family office should bring to the impact investing table a clear understanding of their unique strengths. In the execution stage, this may be leaning into a deep understanding of the industry from which their wealth originated. For example, greening the economy requires value chain transformation, which opens opportunities to bring potential customers of environmentally sustainable solutions on as early investors to reorient the market and finance through impact-derived economic value.

    For other family offices, the operational capacity required for direct investments is too large a burden. In this case, impact funds with a niche strategy, experience in management, and capacity to support the firms they invest in beyond financing to increase their likelihood of success might be the more cost-effective option.

    Evaluate

    Evaluating impact can come through the tools of data and rating agencies. It can also occur through building an understanding of difficult-to-calculate intangibles at your family office. One of the challenges of making impact investments in startups is that most lack sustainability data because of their early stage of development. The key point to remember is that centring success criteria in the strategic discussions before execution establishes an evaluation metric to reference through the entire process.

    The Impact Management Project delineates five dimensions of impact. These factors are:

    Family Office Impact Investing Review 2023 - Ecosystem MapEcosystem Map - Simple Impact Review 2023

    These five factors deserve attention throughout all stages of investment decision-making to ensure the best possible outcome.

    Sudha Bharadia, Co-CEO of Advance Global Capital, an impact investment company with global reach, challenges impact investors to maintain focus on impact and remain mission-aligned if faced with mid-range returns from impact investments. 

    “How do investors qualify ‘enough’ when considering returns and impact?” -Sudha Bharadia, Co-CEO of Advance Global Capital

    The lasting value in the form of documentable impact and the ability to turn over profits into new impact investments reveal the strength of impact investing. 

    ESG and impact reporting is generally voluntary at the fund level. Impact-focused funds may offer guidance and increased reporting. An opportunity to evaluate impact investments, in addition to entire portfolios, and combat greenwashing is through the European Union’s Sustainable Finance Disclosure Regulation (SFDR). The U.S. Securities and Exchange Commission recently established the Climate and ESG Task Force to enforce existing rules in this evolving area. Both of these developments seem to be pushing more funds to clarify their ESG or impact portfolios with increased rigour.

    What is Impact Investing?

    Impact investing is an investment strategy that intentionally deploys capital to create transformational social and/or environmental change while generating financial returns for investors. It combines motivations typically found in philanthropy with the outlook of ethical investing. A good starting point is to recognise that all investments have consequences. The question then becomes whether or not your investments create the intended and desired outcomes? Impact includes the product or service offering and the firm’s operations. Impact investing provides a set of tools to deliberately create positive impact in the form of verifiable results and profit.

    Impact investments “​​focus on real-world changes in terms of solving social challenges and/or mitigating ecological degradation” Busch, T., Bruce-Clark, P., Derwall, J. et al. Impact investments: a call for (re)orientation. SN Bus Econ 1, 33 (2021), p. 32

    Impact investing is a recent development within the broader spectrum of investors aligning their ethical standards with their portfolios. Sustainable investing or socially responsible investing (SRI) are common umbrella terms to describe strategies that incorporate non-financial and ethical criteria into investing, practices that have been around for centuries. Early rationales came from reconciling religious perspectives with financial activities. A notable development came in the eighteenth century when Quakers extended their opposition to Atlantic World slavery to their investing. Similar issue-based investment exclusions continue to this day, led by investors or outside pressure campaigns urging action. The common strand through these efforts, regardless of the topic of concern, is the use of exclusionary criteria to guide investment decision-making to avoid harm.

    A major development in SRI occurred in the early 2000s led by investors looking beyond issue-focused exclusions to include the proliferation of new environmental, social, and governance (ESG) data in their investment analysis. The ESG investing thesis holds that ESG factors directly impact investment outcomes, so their full implications should be included in the analysis. In this sense, it is an approach to investing that incorporates ethical considerations and widens outlooks beyond purely financial metrics. In practice, ESG evaluation and decision-making frameworks are often based on large datasets that score defined factors against criteria packaged by rating providers. ESG investing is an effective, verifiable, and customisable technique to align a range of assets with sustainability goals.

    The key feature that sets impact investing apart from ESG and other techniques within the SRI spectrum is its insistence on accruing both financial and non-financial returns in the form of social and/or environmental good. Impact investing seeks to move beyond the harm avoidance of other SRI approaches to solve problems while creating benefits for investors. In effect, impact investors create investing scenarios where 2+2=5 when the financial and broader social benefits are calculated. 

    Family Office Impact Investing Review 2023 - Ecosystem MapEcosystem Map - Simple Impact Review 2023

    The Field of Play:

    The impact investing ecosystem has a number of stakeholders that family offices can collaborate with to maximise their impact and gains to generate the best outcomes. Family offices can potentially align interests within impact investing networks, frameworks, advisors, data & rating agencies, impact funds, institutional investors, banks, foundations, accelerators, and media.

    Family Office Impact Investing Review 2023 - Ecosystem MapEcosystem Map - Simple Impact Review 2023

    Networks

    Networks and ecosystem facilitators have contributed significantly to the growth and organisation of the impact investing space. Currently, there is a rich array of investor networks with distinct foci. Some target specific topics of impact, while others have regional ambitions. They also vary in composition, variously including institutional investors, foundations, families, individuals, or a combination of investor categories.

    One of the largest and most respected is the Global Impact Investing Network (GIIN), a nonprofit membership organisation of impact investors. Hosting events such as the GIIN Impact Forum, gatherings of its Investors’ Council, and conducting the largest global survey of impact investing, the GIIN is both an invaluable information resource and ecosystem facilitator. Its website hosts material for specific needs, including a research centre, training programs, a catalogue of impact investing performance metrics, and a hub for faith-based investors. The GIIN also maintains strategic alliances with other network organisations.

    Toniic is a network of particular interest to family offices. It currently has around 500 members of HNWIs, family offices, and foundations. Its global reach is clear, with members in more than twenty-five countries in North America, Europe, Asia, and a small representation in East Africa. Membership in Toniic provides access to its global community, investment opportunities, education, and support in measuring impact.

    Impact Frontiers started as a project led by Root Capital and expanded to become an initiative associated with the Impact Management Project. Impact Frontiers’ mission is to “catalyse and accelerate investors’ integration of impact alongside financial risk and return into their investment practices.” With a global set of partners, it offers extensive online resources in addition to its core activity of hosting workshops and creating investing cohorts.

    “Supporting impact investing to thrive and building the regional ecosystem are two vital elements to increase the flow of social investment in Asia.” -Denderah Rickmers, AVPN, Manager, Europe.

    The Asian Venture Philanthropy Network (AVPN) is another leading impact investing network, in a strategic alliance with the GIIN, gathering global partners to create impact in Asia. Its membership rolls currently stand at over 600. A complementary network is the China Alliance of Social Value Investment (CASVI) which consists of sixty institutional members focused on carbon neutrality, health and elderly care, accessibility and inclusion, fair education, inclusive finance, and intelligent manufacturing.

    The ImPact is an impact investing network of family offices. Since its inception in 2016, it has grown to over seventy families from around the world that share the goal of aligning their assets with their values. The ImPact focuses on social and environmental investments. It facilitates relationships, provides educational opportunities for member families, hosts events, and shares investments.

    Frameworks

    The last decade gave rise to a number of efforts to reach a consensus on standards for measuring and reporting impact investments. Fortunately, the space has matured over the last several years and investors can now benefit from new standards. There are now several complementary frameworks, though their adoption is far from universal.

    IRIS+ is the field leading impact investing framework created by the GIIN. IRIS+ currently provides impact data for nearly ten thousand organisations and over twenty thousand users worldwide. It uses an extensive catalogue of metrics, including impact categories such as climate, education, and infrastructure. It also includes fifteen of the UN’s Sustainable Development Goals (SDGs) and independent investment lenses like gender as indicators of investment performance. Standards go through an ongoing development process and are updated through an open public comment period to increase transparency and effectiveness. 

    The Impact Management Project ran between 2016 and 2021 as an ecosystem facilitating organisation with the aim of shaping global consensus on impact investment measuring and reporting standards. The Impact Management Platform carries this work forward. Their website currently has a searchable database of resources on impact standards and impact management.

    The EU formulated the Sustainable Finance Disclosure Regulation (SFDR) in response to the 2015 Paris Agreement. As part of this effort, they released the EU Taxonomy and the EU Taxonomy Calculator. Clearer reporting standards will increase the accuracy of the data available for investors.

    The International Sustainability Standards Board (ISSB) was established in 2021 by the International Financial Reporting Standards Foundation (IFRS) to meet the demand of global investors for “high quality, transparent, reliable and comparable reporting by companies on climate and other environmental, social and governance (ESG) matters.” Although currently at the working group stage, this organisation promises to bring further clarity to the ESG and impact investing space as its activities progress.

    Advisors

    Another valuable resource that family offices have to draw upon are advisors with expertise in ESG and impact investing. Advisors often focus on specific forms of impact (e.g. environment) or geographical location, while others maintain global practices across an expansive range of targeted issues. They can also be company or investor-facing, making them attractive resources to impact-focused startups, existing firms looking to transition their business practices, and investors seeking to expand their reach into impact investing. Advisors are available to lead workshops, embed in your team, and provide tools to aid ESG and impact decision-making. 

    Data & Rating Agencies

    Data and rating agencies provide technological solutions to track investments. These tools are crucial for ESG investors and they can work in conjunction with the frameworks listed above for impact investors. ESG data and rating agencies base their assessments variously on ESG frameworks, the European Union’s Sustainable Finance Disclosure Regulation (SFDR), or the UN’s Sustainable Development Goals (SDGs). Currently, national climate reporting regulations in Europe create the fullest dataset of corporate sustainability practices, while the Securities and Exchange Commission in the United States is advancing regulation and enforcement.

    Anthos Fund & Asset Management provides comprehensive values-based asset management and investment advisory services across various asset classes to generate sustainable social impact and financial outperformance. It works in partnership with clients to curate investment portfolios to match their strategies, with tailored expert management across equities, fixed income, real estate, private equity, alternative investments, (multi-asset) impact investments and outsourced Chief Investment Officer.

    “Each family has a story, as does ours. We empathise, and understand the responsibility each family bears. Both in preserving wealth for future generations and creating more meaningful impact. Like-minded professionals throughout the organisation share our mission to make a positive difference.”- Anke Bos, Head of Marketing & Communication, Anthos.

    BlueMark is the leading provider of independent impact verification and intelligence for the impact and sustainable investing market. It provides independent assessments, ratings, and benchmarking to help investors understand strengths and gaps in their approach to impact investing. BlueMark’s services help investors stay on top of evolving market expectations, establish credibility with key stakeholders, and reduce reputational risks.

    “BlueMark helps family offices efficiently assess and compare the impact strategies of different fund managers across asset classes, identify the impact leaders in their portfolio, and develop tailored engagement plans. With BlueMark’s deep data, comprising 150+ distinct impact strategies, we are able to develop tailored benchmarks, dashboards, and market insights to help family offices design, right-size, and manage their sustainable and impact strategies/portfolios.” –Nadza Durakovic, Director, BlueMark

    Ethic works with families and wealth advisors to create custom equity portfolios that can be tailored to unique values, tax preferences, and financial goals.

    “Ethic’s approach to sustainability and storytelling is what makes for a great experience with families. We work directly with multigenerational families to bring multiple viewpoints together in a consolidated mission statement. We then create a custom portfolio and engaging impact metrics – tying back the important issues the family cares about to industry-leading data and insights. This allows families to see their unique values reflected in their investments and track their impact over time.” – Amanda Baker, Client Relationship Manager, Ethic

    Giving Place is the first-ever software solution to optimise all forms of charitable giving. It provides one portal and one process for a family’s giving program regardless of funding source.

    “We’re purpose-built for family office philanthropy, which means we can handle the complex philanthropic needs of multi-generational wealth but are simple and intuitive to non-experts.” – Paul Lussow, Co-Founder and CEO, Giving Place

    iGravity is a Swiss-based independent advisor specialised in impact investing. It provides investment advisory services by selecting and managing high-impact investments with attractive financial returns, with a focus on private assets in emerging markets. iGravity complements its offering with broader investment strategy consulting services, including the design of impact measurement and management systems.

    “As a pioneer in the impact investing sector, we leverage an extensive network of partners and investees, providing access to unique investment opportunities, also thanks to our presence on the ground (with offices in Uganda and Kenya). We have a holistic approach to selecting and managing impact investments, combining financial and impact considerations throughout the investment process. We build customised impact investment portfolios tailored around the client’s preferences with regards to liquidity, risk/return, and impact objectives. Leveraging iGravity’s broader consulting expertise, we support our clients in designing their impact investing strategy and integrating it within their broader asset allocation. We also contribute to building effective monitoring and reporting systems with regards to both financial and impact KPIs.” – Anne Katrine Vedstesen, Head of Impact, iGravity.

    Matter is a Nordic ESG technology company specialising in the provision of sustainability insights to the financial industry. Matter offers a wide range of data and solutions which enable investors to understand the sustainability of their investments better, comply with regulations, report to LPs, select and monitor managers, and build pioneering sustainable investment offerings. Matter uses the power of collective intelligence and pioneering technology to provide granular, transparent and accountable insights, representing the real-world impact of investments, aligned to leading regulatory and industry-led frameworks, including SFDR and the United Nations Sustainable Development Goals.

    “Family offices often see it as a challenge to obtain a simple, yet comprehensive overview of their portfolio’s ESG profile. Matters analysis platform helps asset owners gain an intuitive, yet robust and granular view on the ESG performance of a given strategy. We have deliberately designed our tool to work for asset owners that don’t have the size to operate a large ESG team, allowing you to run complex ESG analyses with unparalleled depth, across multiple portfolios and benchmarks, at the click of a button.” – Emil Stigsgaard Fuglsang – Co-founder and COO, Matter

    Morningstar Sustainalytics is one of the largest providers with a suite of solutions targeted at investors and firms. Its investor products include ESG ratings, impact evaluations, and national and sub-sovereign risk ratings.

    MSCI offers comprehensive ESG ratings, data, and analytics, in addition to specific climate investing tools. The company has a comprehensive package of tools and services to support investment decision-making around the world. Their clients include many of the world’s largest investors.

    3. Impact Funds

    Many large funds now have impact investing allocations and the list of exclusively impact-oriented funds is growing. There are also investing syndicates oriented toward particular industries and sustainability goals. With collaboration and circularity at the centre of the impact investing space, these players might be best viewed for possible alliances and potential synergies, rather than competition, by family offices.

    Ellevest is an asset manager with a particular focus on gender equality and social impact. Through their investment platform, they help women build wealth and reach their financial goals, and provide wealth management for high and ultra-high-net-worth individuals and institutions.

    Swedfund centres their investment strategy on reducing poverty in developing countries.

    Advance Global Capital specialises in financing receivables of SMEs in underserved markets.

    Impact Partners was Europe’s first impact investing platform. It aligns its portfolio with the United Nations’ SDG with the goal of innovating sustainable capitalism.

    Triodos Investment Management, a subsidiary of Triodos Bank, has decades of experience in impact investing with over €6B AUM. They have offices in the Netherlands, Belgium, United Kingdom and Germany, and reach globally with their investments.

    Patamar Capital focuses on early-stage technology companies in South East Asia from their base in Indonesia. A founding member of the GIIN, it focuses on innovative technology startups in the fields of financial services, SME digitisation, education, healthcare, and agriculture.

    Institutional Investors

    Institutional investors are increasingly allocating portions of their assets to impact investments. Exemplifying funds are Christian Super in Australia and MN in the Netherlands. Christian Super is a fund that invests the entirety of its AUM within its faith-based ethical framework. It views impact investing as an extension of these priorities and formed a separate team with specialised skills to manage its impact investments. One exemplative Christian Super investment is the Casa Capace, a specialist disability housing development in Australia. MN is an asset manager for several large Dutch pensions. Its impact investing activities are an outgrowth of long-standing ESG investment practices. Institutional investors bring layers of expertise in sustainable investing and ESG that they are extending into their increasing impact investing portfolios.

    Globally, insurance companies and pension funds are large players in impact investing. The South Yorkshire Pensions Authority in the United Kingdom is increasing their impact investing allocations. In the United States MassMutual has two dedicated funds for impact: MassMutual

    First Fund and MassMutual Catalyst Fund IIJapan Post Insurance has a similar commitment to impact, but through an ESG lens.

    Banks

    Banks are service providers that variously offer sustainable investment products. As recently as 2018 very few Western European banks included impact investing opportunities for their clients. Worldwide, Private banks have rapidly shifted to meet client demand and expand their impact portfolios.

    The Centre for Sustainable Finance and Private Wealth at the University of Zurich developed a set of tools and targets to align private banking and environmental sustainability better. The Centre is a resource-rich in information for family offices at all stages of their impact journey. 

    Triodos Bank is a world leader in sustainable banking based in the Netherlands. Focusing on the environment, culture, and social impact maintains its independence and mission focus. 

    The Swiss-based Globalance is a leading impact investment bank that caters to the specific needs of family offices. Their investing philosophy looks to the future by seeking innovative opportunities to replace old business models that join sustainability and profit. 

    Lombard Odier is a Swiss-based private bank with offices around the globe. With a focus on achieving carbon neutrality throughout their corporate orientation and practises, they bring deep expertise on impact investing to the table.Bank of America private bank has a mission-aligned sustainable and impact investing solution for clients. Citigroup launched their own Citi Impact Fund in addition to offering sustainable investing strategies through their private bank. J.P. Morgan Private Bank focuses on impact investing through private markets for clients.

    Foundations

    There are a large number of foundations with activities spanning the range of socially responsible investing. Many of these foundations view their investing activities within a spectrum of possible financial opportunities from classical investing to philanthropic grants. Of course, some families also have their own foundations. Impacting investing creates an avenue for families to more closely align their portfolio with their family identity and philanthropic efforts. Foundations can also offer targeted alliances for impact investments in their areas of expertise.

    Accelerators

    Impact investing accelerators function much the same as traditional business accelerators, but with an added emphasis on scaling startups with sustainable business models. They organise boot camps, facilitate connections with potential investors, and provide businesses with the resources and mentorship needed to maximise their growth. Accelerators vary in topical and regional areas of emphasis.

    GründerAtelier runs an impact accelerator with their partner Main Incubator GmbH across a range of topical areas from manufacturing and ICT to housing and education. They have a pan-European lens and are run in Germany.

    IMPACT accelerator partners with large corporations and organisations like UNICEF to tackle challenges around issues such as inclusive mobility and social impact. It has successfully propelled a long list of global startups to the next level of growth and impact.

    Unreasonable Impact is the result of a partnership between Barclays and the Unreasonable Group. It runs programs targeting three geographical areas of emphasis: the Americas, Asia Pacific, and UK / Europe.

    Aspen Network of Development Entrepreneurs is a program of the Aspen Institute that connects entrepreneurs in developing countries to financial, educational, and educational support to help grow their businesses.

    4. Media

    One of the potential ways to increase the impact of ethical investments is through telling stories to bring attention to investment outcomes. Media in the impact investing ecosystem include reports produced by frameworks, networks, and investors themselves. It also includes investors pushing out press releases to shape coverage in mainstream publications.

    Supernova creates impact reports from ESG categories to assist your impact communications. They generate content and visualisations geared towards the current media landscape. Supernova also has tools to help clients understand their own values.

    5. Conclusion

    Impact investing remains a strategy with a proven track record and a growing ecosystem of knowledgeable stakeholders for family offices to collaborate. And as with previous years, the pressing need to centre sustainability in all our activities and throughout the economy is clear. Impact investing is one mechanism to feed capital to innovate the transition across a spectrum of the pressing issues affecting the world today.

    Looking ahead, the current trend of impact investors diversifying their impact portfolios within the asset class should allow family offices and other investors to increase their impact allocations. New regulations against greenwashing should increase transparency and the quality of reporting for investors to better understand the impact of their investments. These are important steps for the maturity of the space and support the continued mainstreaming of DEI and ESG in investing, corporate governance, and consumer decision-making. Family offices can take a central role in their process through investing and many are placing this new strategy at the centre of their next-generation planning to take their family offices into the future.

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