Wall Street Must Wake Up to Impact Investing
Santa Monica, California, June, 24 2011 -
Nearly 40% of affluent investors would like to know more about impact investing — getting a financial reward while benefitting the world — but don’t receive any recommendations from their financial advisors.
A survey of more than 4,000 high net-worth investors conducted last year by a major consulting firm also found that 10% of those investors are “very interested” in impact investments but remain on the sidelines; Wall Street isn’t letting them play, profit and do good.
It’s time for Wall Street to wake up to the fact that what investors want now is very different from what investors have wanted in the past. While “greed is good” may have been the mantra of the financial community, what people are saying now is: “greed can do good.”
In small villages on tiny islands throughout Southeast Asia, people can now hear and read the news thanks to investments in local media organizations by the Media Development Loan Fund, an impact investing vehicle. In this region, governments tightly restrict television, radio and newspapers; censorship abounds. MDLF has changed the tide. And millions have benefited. People living in remote areas can become educated. Meanwhile, the fund has turned a profit.
There are many impact investing stories to tell like this, from Asia to Africa and beyond. And there is much profit to be made.
To be sure, some on Wall Street have woken up to investors’ desires for more information on impact investing.
Ron Cordes, co-chairman of Genworth Financial Wealth Management, a multi-billion dollar financial services company, teamed up with long-time social investing advocate Tim Freundlich to launch Impact Assets.
The site, which went live this week, includes a raft of information on impact investing for both individuals and financial advisors. It also includes the ImpactAssets 50, a widely available global database of leading private debt and equity fund managers that deliver social and environmental value in addition to financial returns. Cumulatively, these managers represent some $9 billion of capital invested across multiple asset classes, geographies, and impact areas (including microfinance, community development, fair trade, and other popular impact investing sectors).
It’s a much needed tool. As the field of impact investing evolves, advisors and their clients are “increasingly looking for ways to make sense of the complex landscape,” the Impact Assets site notes. Its mission is for “advisors to help investors connect their portfolios with their passions and allocate capital to impact investments,” Cordes says.
In short, investors can log on and invest directly or go through their financial advisors to impact the world.
Of course the site is fashioned to appeal to the financial community, with wonkish financial data. But there are different sections: for advisors, for donors, for investors, and for the media. A donor-advised fund is offered for those who are looking to meet charitable goals.
Others on Wall Street should take note of the trend in impact investing from sites such as Impact Assets and others. They could perhaps learn from them. They might even find out how “greed can do good.”