Volume5 Issue3_Larger_2019_Finalised

Investing
www.londonbusinessjournal.co.uk
Clémence
Chatelin: Impact
Investing
Specialist. She
holds a
Bachelor's in
International
Management and
a Master's in
Finance &
Investment
impactful.
‘Impact first’ companies can be accessed
through innovative finance ISAs and
crowdfunding but their inherent risk
makes them more suitable to sophisticated
investors, therefore it is best to speak to a
financial adviser to determine whether you
can afford to potentially lose all the capital
you have invested. Social Investment Tax
Relief schemes can provide a basket of
social enterprises to invest in your local
region or all across the UK, however the
minimum investments are fairly high.
HOW DO I KNOW IF THE INVESTMENTS I
CHOOSE ARE IMPACTFUL?
Impact investing is still very much
subjective and down to the selection
methodology of the fund manager for
active funds. For index and exchange
traded funds (ETFs) the selection
methodology is in the hands of the rating
agencies. Therefore, like with every
investment solution it is very important to
look under the bonnet.
For example, some fund managers would
hold a company such as
Procter & Gamble, this is
because ca. 50% of their
revenue is generated through
the sale of sanitation
products, therefore it is
helping towards the SDG 6
‘Clean Water and Sanitation’.
However, any inquisitive
person would also point out
that P&G are responsible for
much of the plastic and
nappies (with a 57% market
share for nappies!) we find in
landfills and in our seas. Labelling P&G
as a company with a positive impact can
seem a little farfetched to some. Others
would argue that a company such as P&G
is an excellent company to hold because
there is a lot of scope for shareholder
activism and engagement to turn the
company around to be more sustainable.
Additionally, every fund manager will
report on impact in a different way and
not every company in the fund will give
the required data to the fund manager.
This can make it complicated when
guaranteeing that the fund manager
delivers on the impact promised.
I suggest talking to an adviser who will
be able to develop a portfolio suitable to
your preferences that will make sense
financially and from an impact
perspective. It is important to balance
costs with performance, financial needs,
attitude to risk, asset allocation and
exercise ongoing due diligence on the
fund manager.
Clémence Chatelin works at Paradigm Norton and sits on the Investment Committee as the
Impact Investing Specialist. For further information visit: www.paradigmnorton.co.uk
Volume 5 Issue 3, 201 9
www.londonbusinessjournal.co.uk
35