Awards show impact investing gathers momentum
The recent Mindful Money awards showed where the ethical investing landscape is focusing. As well as the obvious, such as “Best Ethical Retail Investment Provider” and “Best Ethical KiwiSaver Fund Provider“, the awards included the “Best Impact Investment Fund” and the “Best Net Zero and Climate Action Investor”. The latter two reflect investors’ growing demand for funds that make a positive difference.
Until recently, ethical investing primarily meant avoiding certain types of investments. However, investors are increasingly looking to actively favour industries and companies wanting to make a positive difference. At Ethical Investing NZ, we’ve certainly seen a higher number of investors requesting this type of portfolio. We’ve been providing this type of portfolio since 2021, and includes the likes of Pathfinder, Nanuk, Stewart Investors, Betashares, GMO and Alphinity. All take a very activist approach to choosing companies for their funds.
Beyond that, one of the more interesting recent developments has been that of “impact investing” and the Mindful Money awards recognised that. So what exactly is “impact investing”?
While there are a number of ways of defining “impact”, the Responsible Investment Association of Australasia (RIAA) sums it up best. “Impact investing means investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.” In other words, an impact investment deliberately tries to measure the specific difference it aims to make. At its most concentrated, one example would be an investment in a social housing project, with a specific aim of reducing homelessness or providing housing to low income families.
Some investors in ‘pure’ impact are primarily interested in making an impact, with any return on their capital being secondary. Others want a return as well as to make a difference. A well-designed portfolio can include both.
If you’re interested to learn more about this, feel free to get in touch with one of our team team@ethicalinvesting.nz
