2018
The Third Dimension for investment is: The Good You Can Do
Murray McEwan / 0 Comments /Following on from our Christmas article we are making more progress with Social Impact investing.
There are two established dimensions for investment: the returns you get and the risk you take. Investing is always about weighing up one against the other. The higher the risk the higher the potential return – and the higher the possibility of loss.
Now there is a third dimension: the “impact” that your investment has on the world; the good it is doing (or isn’t doing). This could be environmental or ethical or social. Sometimes it is measured in terms of sustainability, sometimes in terms of the effect on a local community, sometimes in terms of transparency and supply chains.
One of the ways of measuring “impact” is to use a set of goals adopted by the United Nations in 2016: the Sustainable Development Goals (SDGs) – see above.
Ethical and Socially Responsible Investment has been a significant component of our investment advice for decades. However, whilst being able to help you invest in “ethical” funds we have not been able to demonstrate unequivocally how your investment is making a difference, nor how it is making an “impact”. Moreover, it has been problematic to try and compare the effectiveness of different ethical funds, one against another.
We are delighted to say that this is beginning to change. We have been working with Worthstone (the leading independent social impact investment researcher) for several years now and are developing a mechanism which will enable you to choose investments which will define the impact you wish to have.
A great result will be if you can invest your money: (1) with a level of risk that is comfortable for you; (2) understanding what level of return you can reasonably expect over the long term; and (3) anticipating that your money will do good.
David Flowers & Murray McEwan
4 April 2018
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