3 questions to help shape your sustainable investment proposition
“Exciting but a minefield!” This is how one financial planner I spoke to recently described their firm’s experience of building a sustainable and impact investing proposition for their clients.
This firm had been looking at this area since 2017 but had struggled to make progress as a business because of other, competing priorities. However, for them it had now escalated in importance to become an imperative.
Firms are now stepping up the process of developing and implementing their advice approach to clients interested in sustainable investment. However, turning theory into practice does of course require focused time to develop a systematic and robust approach. The initial strategic challenges this business recognised as important are perhaps worth considering:
Question: How do we align the way we run our business with ‘ESG principles’ – so that our offering to clients is coming from a place of authenticity?
Answer: This might involve signing up to initiatives to provide ‘proof points’ e.g. B Corporation, Worthstone’s Impact Portal
Integrating ESG preferences
Question: How do we ensure there is a common understanding within the business of what this actually means and that there is a consistency between this and the way in which we communicate the opportunity to our clients?
Answer: The Spectrum of Capital, which maps investor motivations to the objectives of a continuum of approaches (i.e. ESG, Sustainable, Impact investing) used to generate positive impact, provided a useful framework both within their own firm and externally with clients.
Positioning sustainable investments within our investment philosophy
Question: Should we start by establishing a “core or satellite approach”?
Answer: Every investment has an impact (either positive or negative) – there is nothing neutral about investment. If you and the client agree with this principle and they have expressed a preference to seek a positive impact as well as a safe and secure financial return then I believe a firm might consider the need “to embrace impact as a valued metric in every investment decision” (which is Worthstone’s vision statement)!
These and other challenges articulated by many firms we work with who started in this same place need to be thought through. However, the good news is that once the willingness is there, firms do progress quickly from this initial phase, and when they begin to implement they often find that their clients are receptive.
For many newly adopting firms, the catalyst for change has been the inspiration, information and ideas they have absorbed from leaders in the field, who have generously shared best practice at events like the Impact Investment Academy. Frequent feedback from advisers that attend is that meeting other advisers and hearing of their experience – how their process is applied in this area, the conversations with their clients – provides them with the motivation to take action and implement.
So if you are looking for an ideal opportunity to set aside some focused time to learn from others who have been on this journey, faced the same challenges as you, who have implemented solutions within their businesses and as a result are meeting latent client demand for advice which embraces sustainable and impact investing, the Impact Investment Academy could be the catalyst to make the step change required in your business?