Advisers commonly ask us “How do you structure a dialogue on social impact investments to draw out a client’s interest in this area without taking them on a guilt trip?!”
- Every investment has an impact but how can you start to categorise what those impacts might be in order to better understand client objectives, manage and report on investments
- An engaging and structured format to open up a dialogue with clients on the impact of investments could be the globally accepted framework of the UN Sustainable Development Goals (SDGs)
- The SDGs are starting to be recognised amongst global corporates and now amongst asset managers as an indicator to assess the future performance of companies both from a commercial and social perspective
- A PwC research report found that SDG awareness amongst the business community is high at 92%
- When looking for goods or services, citizens are more likely to buy from businesses that align with the SDGs
- Impact investors and fund managers are using the SDGs to carve out a common language when it comes to impact measurement and reporting
- Impact profiles that map solutions onto the SDGs are one way to meet client needs in this area.
How do the SDGs affect financial planning, the investment landscape and my clients?
As we outlined in the SDG Blog series: Part I, the UN’s Sustainable Development Goals (SDGs) provide a critical roadmap that definitively sets out what the world’s governments should prioritise as development goals over the next 15 years. This is leading to a growing influence over global corporates who are looking to develop their strategy based on the SDGs and so becoming more relevant to asset managers as well. These goals go far beyond the usual ethical investing themes and have been adopted around the world. See full list below: –
The companies that asset managers invest in and their success
Specialist sustainable investment asset manager WHEB outline in their annual impact report (2017), “Since their publication in 2015, the UN’s Sustainable Development Goals (‘SDGs’) have rapidly emerged as a key framework in assessing the contribution and progress that governments, companies and the financial community are making toward sustainable development.”
A PwC research report[1] found that SDG awareness amongst the business community is high at 92% and “Expectation is high that business will make a significant contribution to help governments, and society for that matter, achieve the goals.” The report goes on to highlight that “Smart companies wanting to position themselves as supporters may want [to] plan now how they can take sustainability and put it at the heart of business growth to stay ahead of their competition.” This aligns with the 78% of citizens surveyed who say they are more likely to buy the goods and services of companies that had signed up to the SDGs.
The report goes on to say that of those companies surveyed, although 49% believe government has prime responsibility, 71% are already making plans on how to respond to the SDGs indicating they are dedicated to taking action.
Meeting client expectations
When it comes to your clients, the SDGs would seem like an appropriate and topical place to start as this is a globally accepted framework and evidences your value and relevance in bringing current thinking to today’s challenges. Many participants in the investment world across the value chain are now using this as their frame of reference. The language of the SDGs brings a ready-made framework for impact communications and is one that might help advisers start the dialogue with their clients in a non-judgemental context.
At Worthstone we recognise that if we can help you develop a straight through process which starts by identifying clients’ social impact investment goals using the SDGs then it would make for an intuitive process. To then report based on how many of the investments underlying the funds are delivering solutions that can be mapped directly to the SDGs provides you and your clients visibility of the effectiveness of the portfolio. We’ve developed profiles on the leading retail impact funds to do just that and if you’d like to know more about Worthstone’s Impact Profiles, we’re launching the first 12 at our Social Investment Academy on 29th November. Buy your tickets here
[1] https://www.pwc.com/gx/en/sustainability/SDG/SDG%20Research_FINAL.pdf
DON’T MISS OUT! Want access to a specialised tool for your client discovery conversations around social impact investing? There’s one coming soon so register your interest here and be one of the first to get it.
If you missed last month’s introduction to the SDGs, please see our SDGs Part I: An introduction blog.
Look out for Part III coming next month.
We’d love to hear how you are incorporating the #SDGs into your client conversations. Tweet us @Worthstone to tell us all about it!