Industry Heavyweights back Positive Investing Blog by John Fleetwood – April 2018

john-fleetwood_504px

Positive investing has been around for many years, but recent fund launches indicate that it’s set to take off in a much bigger way.

Positive investing dates back as far as 1988 when the Jupiter Ecology fund was launched with the express intention of investing in companies providing solutions to environmental challenges. Since then the Ecology Fund has been joined by many other environmental funds, but these form a minority of the ethical and sustainable funds under management.  The overall emphasis has been on Environmental and Social Governance (ESG) and ethical exclusion. This could be about to change.

Over the last year, there have been several fund launches which focus on making a positive social impact as a prime purpose of the fund (as opposed to investing in an environmental or social sector for the purpose of profit alone).  Typically these funds use the United Nations Sustainable Development Goals (SDGs) as a framework for assessing impact. Most encouragingly, our analysis of the fund holdings shows them to be delivering on the stated impact goals. This is a welcome departure from what has become a common practice of stating positive criteria that don’t actually translate to positive social impact.  Highly rated funds include:

  • Baillie Gifford Positive Change
  • Hermes Impact Opportunity
  • Standard Life Global Equity Impact
  • Wellington Global Impact

All of these report on their impact and have a well-implemented strategy. It is especially interesting that one of the largest investment companies, Aberdeen Standard, was keen to invest in larger companies as they believe that the potential for the fund to attract investment is such that they don’t want to restrict the fund size due to liquidity constraints of smaller companies.  Fellow investment heavyweight, Hermes, also believes that there is a very considerable market for the fund and like Standard Life is using its influence to engage with companies on social and environmental matters as well as seeking out positive investments. If this is anything to go by, the future is very bright for positive investing.

These are the opinions of John Fleetwood and do not necessarily reflect those of Pennine Wealth Solutions.