EQUINOX | A POSITIVE IMPACT
INVESTMENT
owning a tree could also have a positive effect on our investment portfolios”
In the meantime, there are other industries which we think can make both a positive impact and an attractive return. The Positive Impact Portfolio invests in stocks which we believe can help towards achieving the 17 United Nations’ Sustainable Development Goals (SDGs). The sorts of companies that make a difference can be the more obvious ones such as those who provide clean energy or water, but they can also be less obvious. For example, one company in the portfolio specialises in natural gas infrastructure in Asia. Gas is a fossil fuel and, of course, that means CO2 emissions, but what the firm is really doing is enabling countries in Asia to reduce their reliance on coal. It would be great if they could switch to renewables – but switching to gas as an intermediate step still means less CO2 is emitted than would otherwise be the case.
At present we only invest in funds which themselves have an objective aligned to the
SDGs. These funds tend to be largely equity and are relatively concentrated, so the portfolio can be risky. The portfolio is currently run on a discretionary basis but in future we intend to launch it as a fund. We believe a fund structure will allow us to take the portfolio to the next level, helping us make an even bigger impact and increasing the possible returns. It would allow us to participate in the funding of projects at an earlier stage. We would be able to participate in initial public offerings or placings for new companies and investment trusts who are investing in private (unlisted) impact projects. There are several such “impact trusts” in the planning stages and we again expect this to be a growing area. Whilst these come with greater risk, they can also have a greater impact than us simply buying shares in companies that have already listed. This is because when we buy shares on the secondary market we are effectively giving our money to another party in exchange for their shares. By participating in primary placements, our funds go straight into the companies’ treasury where they can use them to make a direct impact. We believe impact investing is the next evolution from merely considering ESG factors when investing, to taking action to contribute to positive change.
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