This month we asked Sinead Cullen, Business Manager with Standard Life to talk to us about their Global Equity Impact Fund.

‘Impact Investing’ provides the opportunity to invest in companies that have positive impacts on our society and environment.

People value “giving back” more and more and have a genuine desire to drive positive change in the world. Investors have come to the realisation that they can align their values and their investments, without sacrificing the potential for a financial return.

With this in mind we have launched the Global Equity Impact Fund – the first such fund available to retail investors in Ireland. It provides the opportunity to invest in companies that have positive and measurable societal and environmental impacts.

The fund takes a values-based investment approach and invests in areas such as sustainable energy, recycling practices, health and social care, sanitation, education and employment, agriculture, housing and financial inclusion.

The concept of values-based investing is not a new one. Practitioners of sustainable or socially responsible investing trace its roots back over 200 years to the investment practices of the Methodists. Others suggest it goes as far back to the centuries old principles of Shariah investing.

The modern era of socially responsible investing evolved during the political climate of the 1960s, when investors sought to address equality for women, labour issues and civil rights. These concerns along with the boycott of companies that supplied weapons during the Vietnam War gave rise to the launch of the world’s first ethical fund in the US in 1971 – the PAX World Fund. The apartheid regime in South Africa during the 1980s accelerated the growth and adoption of socially responsible investments, when investors disinvested from companies with operations in the country. This eventually led to economic instability in South Africa and the collapse of apartheid.

The term ‘Socially Responsible Investing’ (SRI) can often narrowly refer to practices that seek to avoid harm by screening companies for investment purposes. Ethical investing tends to adopt the ‘avoid the sin stock’ approach, where companies and industries that are deemed unethical are excluded.

Fast forward to the present day and there has been an acceleration and evolution of approaches to responsible investment practices. One such approach is Impact Investing.

So what is Impact Investing?

Impact Investing is the new generation of responsible investing. It takes a ‘positive screening’ selection approach that involves investing in companies that aim to generate a measurable positive social and/or environmental impact alongside financial return.

Two of the key facets of impact investing are that it must be intentional and measurable. A company that simply reduces its carbon footprint or becomes more transparent about its activities would not be going above and beyond in delivering an impact. A company must actively seek to address a particular social or environmental concern in a quantifiable way.

Assessing Impact

The impact approach of the Global Equity Impact fund is aligned with the United Nation’s 2030 Agenda for Sustainable Development. The agenda contains 17 Sustainable Development Goals (SGDs) that Aberdeen Standard Investments view as addressing three overarching long-term challenges: climate change, rising inequalities, and unsustainable production and consumption. The SDGs and their key performance indicators provide a framework to ensure that efforts are directed to the areas of greatest need.

The fund is suitable for investors that are comfortable with the risks involved with investing in a concentrated portfolio of 35-60 global stocks that aim to create positive environmental and/or social impacts. There’s no reason why investors cannot align their values of having a positive social and environmental impact alongside the potential for a financial return.

Socially responsible, ethical and impact investing are all different approaches to responsible investing and unique in their own right. All are designed to be aligned to investor values. All are designed to provide a financial return.

To view a video about the fund, please click here 

 

 

 

Sinead Cullen, Business Manager, Standard Life

Should you require any further information with regards to the Standard Life Global Equity Impact Fund, please contact our office on 01 4972544 or alternatively you can e-mail ross@hegarty.ie